Destination Management

From Virbus

[edit] 1 Summary - What is a destination?

Different actors in the tourism industry and among tourism researchers use the concept of “a destination” in different senses (Framke, 2002). It is therefore important to formulate the definition that will be used in this study.

The World Tourism Organization (WTO) Think Tank in 2002 defined a tourism destination as a physical space in which a visitor spends at least one overnight. It includes tourism products such as support services and attractions, and tourism resources within one day's return travel time. It has physical and administrative boundaries defining its management, and images and perceptions defining its market competitiveness. Local destinations incorporate various stakeholders often including a host community, and can nest and network to form larger destinations.

The spectrum of destinations is enormous. At one end are compact destination products such as theme parks and spas. These may be destinations for a day trip, short stay or occasionally longer holidays. They are often owned and operated by a single company. At the other end of the spectrum are groups of countries or whole continents. For instance, the European Travel Commission (ETC) and the Pacific Area Travel Association (PATA) market Europe and the Pacific as tourism destinations. Between these extremes is a great range of types and scales of destinations: large geographical areas (e.g. the Alps, the Caribbean, the Baltic region), individual countries, regions, cities, towns, resorts, local tourism destinations and combinations of the above. However, even a solitary vacationer may be simultaneously considering and comparing destinations from both extremes, i.e. whether to have a short trip to an individual spa or a longer trip to the Caribbean.

Despite this great variety of destinations, all destinations are products: the consumption of the complex of activities that comprises the tourism experience is what is being sold to customers. Ultimately, the tourism product, i.e. what is being sold to consumers is a vacation experience, which typically consists of activities performed by several independent services firms.

In tourism, not only the marketing of a destination, but also the delivery of the tourist's experience of the destination as a product is extremely diverse and complex. Many individual firms that diverge from each other in terms of their objectives, resources and capabilities are involved in bringing the product to the customer (for related arguments, see Flagestad & Hope, 2001; Ritchie & Ritchie, 1998). The destination product being delivered is, in effect, a series of products and services offered within a destination environment. As Asworth and Goodall (1990, 7) note, “Places…both contain tourism facilities and attractions and simultaneously are such a facility and attraction. The place is both the product and the container of an assemblage of products.”

In VIRBUS, tourism destination product is defined as an amalgam of tourist products and services, offering an integrated experience to consumers, in a geographical region and physical setting, which its visitors understand as a unique entity.

[edit] 2 Why is it important

The tourism industry is very much a service industry. However, compared to most other service industries it has several differentiating features, deriving from the complexity of destination products and intrinsic characteristics of tourism. There are two particularly significant features of destination management. Firstly, tourism destinations are typically not created by one single company, but instead by a network of independent companies and other actors, which together produce the services and facilities required to create the tourism destination product. Secondly, the tourism product consumed at a particular destination is assembled from the variety of products and services available, but this assembly is conducted largely by the consumer, not by the producer. A traveler typically knows which accommodation services he/she will be using during his/her visit to a destination, as these are reserved in advance, but rarely does he/she know much more than that.

By nature, destination management is a collective phenomenon. No individual corporation or firm has total ownership or control over the destination product, except in very few extreme cases (e.g. Disney in Orlando). Instead, the planning, management and implementation of a destination product are highly relational, and involve inter-organizational negotiations and coordination.

[edit] 3 Why has it been developed and by whom?

Developing management strategies for destinations is a complex processes, partly because of the characteristics of the destination product. Buhalis (2000) contends that destinations cannot be marketed as enterprises, due to the dynamics of interests and benefits sought by stakeholders. In addition, he claims that most destinations are amalgams of independent small- and medium-sized enterprises, which already have their own marketing strategies. The responsibility of management and, in particular, that of marketing management of the destination product has traditionally been transferred from individual companies to a Destination Management Organization (DMO)2 (Buhalis, 2000). Pike (2004, 14) defines a DMO as “any organization, at any level, which is responsible for the marketing of an identifiable destination. This therefore excludes separate government departments that are responsible for planning and policy.” DMOs are an overwhelmingly common form of co-ordinating marketing efforts in the tourism industry, insofar as virtually all national tourism organizations and tourism industry sector members have recognized their interdependence and work together to market tourism to their destinations (Bhat, 2004).

The core purpose of DMOs is to enhance sustained destination competitiveness (Pike, 2004). The primary responsibility of DMOs is destination marketing, along with three other important responsibilities: coordinating industry, monitoring service and quality standards, and fostering community relations (Pike, 2004).

The theoretical background of destination management has not been established by one author, but a number of important pieces of work have been listed at the end of the document.

[edit] 4 When should you use it?

Embarking on a cooperation in destination management has tremendous potential in generating competitive advantage for the destination, and thus for all companies operating within the destination. However, co-operation is not a goal in itself, but should be regarded as an investment and its return on investment should be evaluated. All resources allocated to co-operation (e.g. joint-marketing) are taken away from the activities of the firm itself. As an example, money invested to destination joint-marketing by a company, are taken away from marketing the company itself. Thus, from the point of view of a single company, careful balancing of the allocation of resources to joint activities vs its own activities is required.

[edit] 5 How does it work?

The network nature of tourism destinations obviously creates considerable managerial challenges, as individual firms may have partly common, but also partly diverse and even opposite strategic objectives, and the same firms may also be fierce competitors in other areas of action. From the perspective of a single firm, the challenge is threefold. When entering co-operation, it should aim simultaneously to

(1)develop strategic objectives for the entire destination jointly with a network of other firms,

(2)secure in the negotiation process that the jointly developed strategic objectives supports its own strategic objectives (as opposed to those of other network members) as strongly as possible and

(3)modify its internal processes to fit the strategic objectives and value promise offered by the destination to customers.

In other words, by co-operating with other companies operating within a destination, individual companies together may develop destination-internal operating models, which create benefits that cannot be created by any of the companies alone. An example of this is joint-marketing; the resources of any individual company are limited, but by combining their resources (monetary, skills etc) they may create more powerful campaigns and thus attract more visitors. If the companies of a destination decide NOT to invest time, money and other resources into co-operation, they are likely to lose in competition to other destinations, which have decided to do so. As an example, a consumer is more likely to end up visiting a destination, which has been able to create well-functioning joint-marketing activities than to a destination which has not.

An interesting point is that the benefits of the co-operation (e.g. brand equity of the destination) developed through a network are not distributed evenly to the members of the network, but instead some firms get more than others from the collaboration.

[edit] 6 Related topics/tools

- Strategic management literature in general, marketing management and destination management in particular

- Network literature in general, business networks in particular.

[edit] 7 Links

Asworth, G.J. & Goodall, B. (eds) 1990. “Marketing Tourism Places”, Routledge, London

Bhat, S. 2004. "The role and impact of strategic alliances and networks in destination marketing: the development of www.purenz.com", International Journal of Tourism Research, vol.6, iss. 4, p. 303

Buhalis, D. 2000. "Marketing the competitive destination of the future", Tourism Management, vol 21, p 97-116

Flagestad, A. & Hope, C.A. 2001. "Strategic success in winter sports destinations: a sustainable value creation perspective", Tourism Management, vol 22, p 445-461

Framke, W. 2002. "The Destination as a Concept: A discussion of the Business-related Perspective versus the Socio-cultural Approach in Tourism Theory", Scandinavian Journal of Hospitality and Tourism, vol 2, no 2, p 92-108.

Fyall, A. & Garrod, B. 2005. “Tourism Marketing. A Collaborative Approach”, Channel Live Publications, Clevedon

Moilanen, T.J.M. 2008. “Network Brand Management: Study of Competencies of Place Branding Ski Destinations”, PhD dissertation, Helsinki School of Economics. Helsinki

Pike, S. 2004. "Destination Marketing Organisations", Elsevier

Ritchie, J.R.B. & Ritchie R.J.B. 1998."The branding of tourism destinations", A basic report presented in 1998 Annual Congress of the International Association of Scientific Experts in Tourism, Marrakech, Morocco