Tag: tourism competitiveness

Business model innovationCollaborative business modelsInnovationMarketing 3.0Strategy

The innovation challenge in destinations

Research and innovation will have a fundamental role in the competitive improvement of destinations. Any policy for the destination development has to include a vision and an innovative orientation that brings some sort of competitive advantage.

In the Spanish economy, the tourism industry has proved to be one of the most dynamic sectors, which generates multiplying effects in the local economies in all sub-sectors directly and indirectly related to tourism. This multiplying effect together with the sector’s evolution worldwide has contributed decisively to increase competition, which in turn makes the industry develop strategies oriented towards the improvement of its competitiveness.

The new market after the changes in the offer and demand, requires tailored services and activities, with high quality standards, which makes attaining customer satisfaction more difficult than ever before. In this regard, tourism offer has to be organized according to the targeted market segments requirements in order to be successful. Unlike in past times, market penetration, promotion, price setting, product quality and quantity are variables defined by the demand and not by the offer, for it is necessary that the service and activity production in the tourism sector takes into consideration this new scenario, and so new destination models restructuring the links and relationships between stakeholders are being developed.

In any case, research and innovation will have a fundamental role in the destination’s competitiveness improvement. Any action for the successful development of the destination has to include a vision and an innovative orientation that can generate some kind of competitive advantage. The main challenges to foster competitiveness in destinations are the following:

Innovate in mechanisms and cooperation formulas and strategic partnerships. It is basic to develop mechanisms that work both from the public and the private scope, to boost new cooperation models between businesses and public-private partnership, as a way to gain profitability, dimension and commitment in the development of the tourist sector.

Innovate to improve the sector’s competitiveness. There should be techniques and strategies to improve the business and the destination’s competitiveness. This includes the development of Innovation Plans for the improvement of business models, management models, service processes and the destination’s business marketing.

Innovate for the introduction of new tourism products and consolidating the profitability of the current ones. It will be necessary to foster the creation of unique tourism products based on new business models, build upon the capacities and unique resources of the destination, with a high experiential value, using the ICT and being socially and environmentally friendly.

Leverage the resources and hidden heritage. It is crucial to develop new formulas for leveraging tourism resources that are complementary to the traditional ones, unknown or unexploited, so as to achieve the profitable consolidation so long as they create an outstanding experience and expand the revenue streams.

Innovate in destination’s promotion and communication formulas. There is nowadays a communicational saturation, which makes it necessary to face the future with promotion innovative mechanisms which allow optimization of the destination’s visibility.

Innovate in tourism product marketing. There will have to be developed new methods and tools to market tourism products, in order to favor the sector’s competitive improvement and control the dependence on external channels, in a way that guarantees some influence power. In this context, it is fundamental to develop strategies to improve the intelligence and the knowledge of the products and its results, and the client and its consuming habits.

Innovate in client relationship formulas. The strategy will have to develop new client management formulas. Starting up innovative mechanisms to do CRM is vitally important not only to retain clients, but also to achieve a more effective marketing.

This blogpost is from http://www.visionesdelturismo.es/innovacion-de-los-destinos-turisticos/

StrategyStrategy planning & execution

Clustering benefits for competitiveness

The cluster structuring and development in a destination offers four main types of benefits: enhancing competitiveness, boosting profitability and growth, ensuring sustainability and increasing marketing effectiveness.

As the Competitiveness Planning 3.0 Whitepaper explains in detail, destination competitiveness is based on the relation between value offered to the visitors and efforts demanded, considering experiences, feelings, service quality, and positive impacts of tourism development in the destination as the sources of value; and discomforts, risks, price and negative impacts of the tourism development in the destination as the sources of efforts demanded, or factors diminishing value.

Among all these key factors that determine the destination’s competitiveness, the tourist experience is probably the most important. In this regard, having a higher concentration of experiences –related to the same motivational profile- available within a short distance (not needing to change accommodation in many cases, nor consuming much time in transfers) clearly optimizes the whole destination experience. Cluster development also entails an increasing variety of experiences available, beyond the experience efficiency due to the reduced distances within the cluster.

A good cluster planning should consider a strategy to prevent congestion issues by spreading the tourism flows right from the conception of the cluster layout. This may be achieved by creating many itineraries throughout the cluster to diversify the visitor’s flows –avoiding “backbone itineraries” which tend to concentrate the flows-, and preventing bottlenecks.

Furthermore, by creating themed itineraries and charming transportation systems which may eventually become iconic experiences themselves, not only are the tourist flows spread out but also the experience is enhanced. Charming transportation systems may be traditional transportation means –gondolas, tramways, etc.- made tourist friendly in terms of comfort, or just innovative transport means which are a new experience for the visitors.

Business concentration makes it also more feasible to invest in key resources, which eventually influence positively the cluster’s competitiveness. This may be the case of educational facilities, R&D centers, and cross-destination infrastructures related to accessibility, environmental management & protection, etc.

Do you think of other clustering benefits for the destination competitiveness?

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 & execution

Competitiveness clubs

Beyond the DMO’s Board of directors, who are accountable for the implementation of the Tourism Development Plans –along with other stakeholders-, there can be created a sort of Think Tank usually called a Competitiveness Club, with representatives of both the private and the public sector, to work as a consultation body that gives support and advice in the elaboration and implementation of the Tourism development Plans.

This is a volunteer driven organization, where members participate driven by their professional interest in exchanging opinions and visions on the challenges of the local and global tourism industry. Particularly, when elaborating the competitiveness assessments and improvement programs, the Competitiveness club is due to provide support in the assessment of the conditions of the destinations’ operators, products, facilities, infrastructures and related supporting sectors.

Furthermore, the Competitiveness club should provide advisory support to the local Government and DMO both in the destination strategies design and implementation. This would entail a close cooperation with the monitoring system and the open innovation system. To be effective, there should be appointed a formal leader and a secretary.

Finally, as a representative body of the tourism private sector, it could also play the role of lobby, to defend the interest of the local industry in the design of the Government policies, given their important influence in many issues affecting the tourism business.

What other functions do you think that Competitiveness Clubs could be in charge of?

StrategyStrategy planning & executionTourism marketing

Product competitiveness programs

Beyond the aforementioned recommendations for specific products or sites, these competitiveness programs should also be taken into account, as they apply to the whole product category:

Product clubs are voluntary associations of stakeholders related to the product category, working like a forum or think tank, and led by the DMO Product Manager responsible for the product category, with the following goals and functions:

  • Carrying out market intelligence research
  • Analyzing competitiveness gaps, marketing KPIs and weaknesses to overcome
  • Planning, funding and coordinating the marketing activities
  • Developing new products and improving product competitiveness
  • Monitoring the result of the marketing activities and product operations
  • Lobbying to solve problems affecting the product business
  • Training the local operators in marketing and management

Product Quality labels facilitate the identification of key attributes by the tourists to help them prioritize their visits. Obtaining a label entails complying with certain quality requirements that eventually encourage operators to improve product competitiveness. For instance, there could be labels such as “Gourmet restaurant”, “Charming village”, “Historical site”, “Boutique hotel”, etc.

The method to develop the Product Quality labels should be the following:

  1. Selecting the special labels to create
  2. Defining the requirements in cooperation with the Product Clubs
  3. Labels graphic designing
  4. Carry out communication campaign targeting local operators to adhere to the label
  5. Assessing interested operators on the requirement compliance
  6. Introducing the Product Quality Labels in the marketing materials

Benchmarking trips are organized by the Product Club for the destination product operators with three main goals oriented to improve product competitiveness:

  • Learn best practices from the best performing destinations and operators
  • Learn about the destination model key success factors and competitive advantages
  • Inspire operators with ideas on developing products, providing more value with less efforts

The benchmarking trip organization should consider the following steps:

  1. Identifying possible benchmarks: destinations and operators
  2. Studying every benchmark to figure out what can be learn from each one
  3. Choosing the benchmarks with the most applicable know-how to the destination

Which other product competitiveness programs would you consider?

StrategyStrategy planning & execution

Product competitiveness strategy: infrastructures and services

Beyond enhancing the resources available and the correlated experiences, there are other issues more related to the discomforts and insecurities that need to be fixed sometimes, such as:

Signage: not only to arrive to the site but also to move around within it, good signage is essential to help the visitor get the best out of his or her time.

Food & beverage: even if it is not an essential part of the experience, it is necessary to provide visitors with the chance to buy snacks or drinks, offering a good range of products.

Personnel training: ongoing human resources education in the right attitudes and skills development is recommended to guarantee a good service.

Information: offering precise information to get to the site (website, leaflets, guides, etc.) is as much important as information about the site resources, itineraries, stories, etc.

Accessibility: sometimes there are sites isolated within their cluster, with limited accessibility due to poor public transport service. Services such as “taxi calling” can solve this issue.

Urban aesthetics: some elements such as benches, dustbins, public lighting are essential to keep the tourist areas clean and safe, as well as to provide comfort to the visitors.

Congestion: some sites suffer from congestion issues to be solved through regulated group sizes, scheduled visits to control flows, queuing time information, etc.

What other kind of generic infrastructures and services would you consider to reduce efforts in a tourist attraction?

StrategyStrategy planning & execution

Developing value for money

The value assessed by the rational mind is that which takes into account the services and service quality received in relation to the prices paid and overall costs. This is usually the least important of the factors to assess the destination competitiveness, but it should not be disregarded, as the importance of every type of value depends on the type of target, and price sensitive tourists abound. In this regard, it is important that the destination offers a range of services –namely accommodation- to match all targets’ budget. There are many different issues to consider when assessing both Service quality and price.

Service quality

Service quality may be defined as compliance with the client’s expectations in all kinds of services provided throughout the trip:

  • Transport: punctuality, comfort, schedule availability and adequacy, staff attention, added services like entertainment, food, etc.
  • Accommodation: staff attention, compliance with the rating system & quality certifications.
  • Food & Beverage: taste, variety, originality, healthy production procedures, quality of the ingredients, cleanliness of the premises, etc.
  • Activities: safety, staff kindness, compliance with sales information, etc.

Price

Price issues encompass many factors affecting the overall cost:

  • Currency exchange: both the exchange rate and commission may entail a significant cost
  • Package price: the bulk of the budget goes to transport and accommodation, especially when buying a holiday package
  • Tips: many countries are used to receiving tips in service businesses
  • Daily expenses: all costs related to daily life not included in the package, like meals, public transport, snacks, etc.
  • Shopping & souvenirs: this is sometimes one of the main activities or purposes of a trip, and so eventually accounts for a considerable percentage of the overall budget.

Improving cluster competitiveness is a complex challenge to tackle, as it entails a large array of variables which in many cases have to be coordinated. Further, it is important to know which of these factors are more and less important to our targets, to prioritize our efforts.

Do you think of other variables influencing the value for money?

StrategyStrategy planning & execution

Developing emotional value: discomforts and risks

There are many sources of discomforts that tourists may have to face:

  • Lack of cleanliness: in the accommodation, transport facilities, restaurants, streets, tourist sites, urban and natural landscape, etc.
  • Lack of proper services and infrastructure: uncomfortable transportation means, poor comfort of the accommodation, poor variety and quality of food & beverage, etc.
  • Adverse weather & air conditions: temperature, wind, humidity, rain, air pollution, etc.
  • Bureaucratic procedures: visas, money exchange, special permits, etc.
  • Cultural differences: different schedules, language barrier, different values, food, having to dress in a certain way, etc.

There are also many types of issues that create insecurities in the tourists:

  • Safety: Lack of proper safety standards in services and infrastructure, lack of street security (vandalism, terrorism, pickpockets, etc.), meteorological threats, etc.
  • Health: lack of emergency & medical services, threat of contagious illnesses, etc.
  • Information: lack of information about the destination, language barriers, lack of proper signage, lack of price transparency, etc.
  • Service quality: possibility of luggage lost or late arrival, transport delays, etc.
  • Uncontrollable risks: weather conditions impeding the planned activity, etc.

Do you think of other risks of discomforts that might need to be reduced or managed?

InnovationStrategyTourism marketing

Developing destination’s emotional value: feelings

There are also many kinds of feelings that the destination atmosphere may create in the visitor. Such sensations can be created through adding several kinds of features or extras that provide feelings of life, authenticity & harmony, magic atmosphere, variety, fun, etc. Such extras may be, for every kind of feeling:

  • Harmony & authenticity: urban aesthetics, people /employees dressing in traditional costumes, architectural style, souvenirs, cultural monuments & sculptures, natural smells, open kitchen in a restaurant, religious ceremonies, artisans handcrafting products, etc. Charming destinations are famous for their identity reflected in their architectural style.
  • Life: wildlife (birds, butterflies, squirrels on trees, flying fish, ducks and swans on water canals or lakes, etc.), artists performing outdoors (human sculptures, musicians, painters, acrobats, etc.), street markets, water springs, liveliness of local population, plants and flowers on balconies, people performing traditional arts (dancing, Tai chi, etc.), and everything else that turns sightseeing into life-seeing and feeling.
  • Magic feelings: Night illumination with different colors, attractive smells, fireworks, inspiring music, dancing springs, permanent nice surprises, sophisticated street performances, etc. and the synchronicity between all these elements.
  • Variety: different kinds of shops in shopping streets, broad range of courses in a menu, facades of different colors, markets with wide variety of products, gardens with many types of plants and flowers, options for amusement, architecture, etc.
  • Hospitality: cleanliness, proper indoor temperature, kindness of the local population, proper condition of the cultural and natural heritage, interior design and materials, service customization, etc.
  • Relax: birds singing, water flowing, relaxation music, green areas, silence, etc.
  • Safety: cleanliness and good conservation of the urban landscape, kindness and honesty of the local population, peaceful atmosphere, lack of beggars in the streets, illumination at night, police in the streets, smooth traffic, good functioning of public services, etc.

Besides, there are some feelings closely related to Tourism 3.0:

  • Customization: making the tourist feel as a unique person, being called by one’s name by service suppliers, being able to tailor the service experiences, small personalized gifts, etc.
  • Contribution: letting people know how their contribution in the open innovation or content marketing system is useful for the destination, letting people visualize the result of their contribution, letting visitors provide ideas and opinions on as many issues as possible, etc.
  • Growth: learning new skills, opening one’s mind, gaining personal and social awareness, acquiring new good habits, and all that results from the life-changing experiences.
  • Recognition & reward: being mentioned in a public place or document for your contribution, receiving an award, receiving a tangible reward, etc. for your contributions.

Do you think of other ways to create positive feelings for the visitors?

StrategyStrategy planning & executionSustainability

Developing destination’s spiritual value

The programs or actions to neutralize or reduce the negative impacts of the tourism activity are nearly or exactly the same ones that eventually manage to create positive impacts. In most cases, it is just a matter of the initial state of the destination and the intensity and ambition of the program what makes the difference between neutralizing or reducing negative impacts, and creating positive ones. Such impacts may correspond to three different spheres of influence: social, economic and environmental impacts. The main factors that create spiritual value in a destination are the following:

  • Fostering entrepreneurship at the base of the pyramid and training the poorer layers of the local community to integrate in the labor market not only reduces poverty but also enhances social cohesion, and creates a spirit of social harmony as a result of the integration of these groups of people in the community. This is very likely to be perceived by the visitors and appreciated by their human spirit.
  • Encouraging community members to contribute through the open innovation system in creating stories, co-creating products and bringing in ideas to enhance competitiveness is also a powerful social impact generator. Leveraging people’s talents, rewarding and giving them recognition for their contribution makes them feel like valuable protagonists within the tourism industry system, and helps them grow personally, eventually shifting their attitude towards tourists, being more hospitable and helping them have a memorable experience.
  • Preserving the natural environment and fostering the growth of the local endemic species helps the destination boost its uniqueness and character. Creating green spaces both in the public and private areas with typically local trees, plants and flowers conveys a spirit of healthy environment. Furthermore, in the cases where there are typically local animal species, it is also good to make them be part of the destination experience. Both lush animal and vegetable life provide positive impacts to the visitors’ human spirit.
  • Enhancing the attractiveness of the destination also makes it a pleasant living place for its inhabitants. Improving cleanliness, heritage restoration, developing cultural entertainment –events, museums, etc.-, creating green spaces, clearing pollution, making the urban areas more human friendly, harmonizing urban aesthetics and enhancing other aspects of the landscape are appealing to all community stakeholders.
  • Boosting economic development and wealth creation is one of the main goals of tourism development. The tourism 3.0 approach intends to spread the generation of wealth among all types of stakeholders. A clear indicator of success is therefore the increase of disposable income throughout all layers of society. The extent to which the destination collaborative model expands is one of the main key success factors to make it happen.

The key idea behind the creation of spiritual value is the balanced development and shared growth, considering tourism businesses, employees and micro-entrepreneurs, local inhabitants not related to the tourism activity, non-tourism businesses, and the cultural and natural heritage. Tourism development should be a win-win activity for all elements that are part of the destination life to make it appealing to the visitors’ human spirit.

Do you think of other factors which contribute to create spiritual value?