Destination Management in Tourism
Destination management has become increasingly important in the modern context. The process is vital given the burgeoning demand for tourist activities. Today, travelers have several destination choices to choose from, while destination-marketing organizations are becoming well equipped to manage and create highly competitive markets (Wang & Pizam, 2016). Research indicates that efficient and consolidative destination management approaches demand a proper comprehension of global tourism, which has become a significant socioeconomic pillar for developed and developing countries alike (Pratt, 2016). The tourism industry has evolved over centuries from when only rich people could afford to travel from one place to another. Over the last few decades, the industry has grown by leaps and bounds, mainly due to the effects of globalization on society.
Research also shows that tourism has several positive and adverse effects. First, tourism has fostered the financial development of Small Island Developing States (SIDS) on a massive scale. According to Pratt (2016), SIDS view tourism as a chance for the host authorities to earn much-needed tax revenues and foreign exchange, enhance the economic empowerment of local communities, and expand basic infrastructures like airports and roads. Tourism also allows SIDS to invest in essential utilities for the population. Second, tourism is a critical financial pillar in the global economy and one of the largest employers. According to Westcott (2016), 1.4 billion tourists traveled in 2019, representing a 5% increase from the previous year. Third, the tourism industry has significant socio-cultural impacts on local populations triggered by the tourist-host contact concept that manifests when the hosts and tourists meet and exchange ideas, products, or services.
It is vital to add that modern governments spend heavily on tourism infrastructures, allowing other sectors to thrive. From a socio-cultural viewpoint, governments spend on tourism to preserve local heritage, enhance infrastructural development, avail better basic facilities, construct leisure amenities, and organize social events (Timothy, 2019). Given the massive importance of tourism in the modern context, it is vital to investigate destination management and how it can enhance destination development activities.
This paper analyzes destination management by considering its association with tourism, the influence of external factors (PESTLE) on the development of destinations, the need for destination management, the emergence of destination marketing organizations (DMOs) at local and international levels, the evolution from destination management companies (DMC) to destination marketing organizations (DMO), and the factors that influence the performance of DMCs. Findings indicate that destination management is a local, regional, and national priority that can continuously enhance top tourist destinations by providing services during peak and off-peak seasons, that DMOs are more effective than DMCs, and that the success of DMCs depends on strategic planning, unique selling points, destination access, the nature of attractions, and leadership.
A Critical Analysis of the Need for Destination Management
The Concept of Destination Management
A high percentage of tourist activities today occur at destinations, which are the foundations of tourism system modeling and analysis. Destinations are best protected and enhanced through destination management. Destination management is the all-rounded approach of managing tourist destinations via coordinated processes (Fesenmaier & Xiang, 2018). The process entails the management of local accommodation, events, tours, marketing, activities, transportation, and attractions. It is vital to add that destination management is a complex process undertaken by destination marketing organizations (DMOs). Destination management aims to guarantee positive effects on a particular destination by tourist activities and focuses on amplifying benefits by optimizing supply and demand.
As has been stated, destination management is a multifaceted activity that demands an all-inclusive, holistic, and methodical approach to understand. Tourism demand means that travelers have several destination choices to choose from, while supply implies that destination marketing organizations are well equipped and managed to create a highly competitive market (Wang & Pizam, 2016). As such, destination attractiveness and competitiveness require operative and consolidative management policies which rely on a proper understanding of market conditions.
The enhancement of destination management activities triggers a subsequent development of tourism on a global scale. Research indicates that the industry will continue developing over the short- and long run as long as structural factors like economic affluence, population growth, business expansion, and travel patterns remain conducive (Wang & Pizam, 2016). Tourism will also continue developing if social factors like technological connectedness and cultural globalization become favorable. The United Nations World Tourism Organization (UNTWO) estimated 1.5 billion international arrivals by 2020, although the estimates never materialized due to the COVID-19 pandemic (UNTWO, 2021). Nevertheless, the international body posits that after recovery, the global tourism sector will continue its exponential growth and that hundreds of thousands of small, medium, and large organizations will resume the delivery of services to international travelers.
Efficient and consolidative destination management approaches demand a proper comprehension of global tourism. In the modern context, tourism has become a significant socioeconomic pillar for developed and developing countries alike. According to Pratt (2016), tourism is a cultural, social, and financial activity that involves people traveling to nations or localities outside their everyday environments for professional or personal purposes. People who travel from one place to another in search of business or pleasure are called tourists. Tourism is more than just moving from one place to another; and it entails different services and activities across different sectors.
It is also vital to differentiate between tourism, hospitality, and travel. The difference between tourism and travel is that the latter is an umbrella term for various industrial activities encompassing the tourist experience, while travel involves movement from one place to another primarily for fun and recreation (Pratt, 2016). In contrast, hospitality refers to economic activities that make people feel welcome when they visit new places. Put simply, the hospitality sector amalgamates the food and beverage industries. However, tourism, hospitality, and travel cannot exist in the absence of either. Coexistence ensures that regions, businesses, or countries can benefit fully from the movement of people from one place to another in search of business and pleasure.
Tourism is a global industry and a large-scale employer. According to Pratt (2016), the industry has evolved over centuries from when only rich people could travel from one place to another. the author posits that only those considered royalty or from the upper classes could afford travel for leisure. For example, in 17th century Europe, intelligent young men were offered opportunities to undergo grand tours due to their high standing. There were instances of religious pilgrimages in the Middle Ages, such as the Hajj to Mecca, which became an important Islamic milestone.
These trends would continue until the mid-18th century when the first travel agency called Cox & Kings emerged. The owner was Richard Cox, the British Royal Armed Forces’ official travel (Rodríguez-Díaz & Espino-Rodríguez, 2019). In 1841, Thomas Cook introduced his leisure travel agency, which was the first of its kind. The purpose of Cook’s company was to help British nationals to engage in leisure travel and join in the temperance movement, which sought to reduce or criminalize alcohol consumption in the United States. Due to the increased significance of railway and road travel, tourism became widely practiced, and people such as Karl Benz and his wife saw this as an opportunity to monetize the industry. As years wore on, the industry received a further boost due to the introduction of the jet in 1952. Commercial air tourism became commonplace as people traveled to destinations such as Colombo, Johannesburg, and London. Soon, all-inclusive resorts emerged, which is still the reality today.
Over the last decades, tourism has grown by leaps and bounds, mainly due to the effects of globalization on society. Globalization is the integration and interaction of different people, governments, and companies worldwide (Timothy, 2019). The phenomenon now thrives due to advancements in transport and communication networks. As the world becomes a global village, it becomes easier for people to move from one point to another.
Although globalization has enhanced global tourism, it is vital to note that the sector has been interrupted severally. For example, during the Great Depression, World War I, and World War II, people could not travel easily due to war, poor economics, and restrictions. More recently, the COVID-19 pandemic, terrorist attacks, the war in Iraq, and the West Nile virus have had adverse effects on tourism. However, the industry has shown an ability to always bounce back from adversity due to various technological advancements. For instance, the increased internet usage has transformed the distribution and promotion of tour products and services. As a result, online travel bookings have become commonplace as people utilize popular websites such as Hotels.com, Cheaptickets, and Travelocity. As more trends emerge, tourism will continue to grow exponentially. The following section covers various factors that can affect the destination management industry.
The Influence of External Factors (PESTLE) on the Development of Destination
As has been shown, the tourism industry has been expanding for centuries. Part of the industry’s development has depended on destination development. The destination development process refers to the strategic expansion and improvement of predefined factors to sustain the development of favorite destinations for travelers (Rodríguez-Díaz & Espino-Rodríguez, 2019). Destination development focuses on the supply of tourism services by offering gripping experiences, excellent infrastructure, and extraordinary services to lure repeat visitation. Public and private organizations use destination development by creating well-defined strategies for specific regions. For most governments, the overall objective is envisaging world-class tourism destinations that offer competitive products and authentic experiences, which can always cater to visitor demand. Finally, it is vital to add that destination development often occurs as a joint effort between tourism businesses, DMOs, economic development agencies and trusts, local and regional authorities, not-for-profit organizations, and government ministries.
In the modern context, destination development can be analyzed through a PESTEL framework. PESTEL refers to a tactical framework utilized to appraise a business’s external environment by dividing the risk and opportunities into political, economic, social, technological, environmental, and legal aspects (Erasmus et al., 2019). The authors add that PESTEL analyses are ideal frameworks for examining business strategy and for corporate strategic planning. PESTEL is an augmentation of the PEST framework in that it also encompasses the environmental and legal impacts of a business’s environment.
The main political factors affecting destination development are border situations, government stability, and tax incentives. When national authorities decide to open up borders for foreigners, it becomes easier for destination marketing organizations to invite travelers to view the country’s top destinations (Rodríguez-Díaz & Espino-Rodríguez, 2019). Although there are border issues in some countries, most destinations are reachable and can welcome travelers from all over. Positive border situations require accessible visas mainly through the integration of digital tools to smoothen the application processes.
Political stability also determines whether visitors can enter specific countries. Rodríguez-Díaz and Espino-Rodríguez (2019) note that most travelers are open to traveling worldwide and that political danger is always a fear factor. Hence, destination marketing organizations operating in politically stable countries can better plan their work than those operating in hazardous locations. The final political determinant of destination development is the ability of governments to offer tax incentives. Tax incentives are tax deductions or exemptions meant to encourage the development of a given economic activity or industry (Rodríguez-Díaz & Espino-Rodríguez, 2019). In many nations, tourists can get tax refunds on goods bought during trips within said countries. Although tax incentives cannot solely guarantee increases in tourist traffic, they are an integral aspect of modern destination development activities.
Economic factors affecting destination development are the levels of disposable incomes and the sharing economy. Research indicates that household incomes have risen over the last few years and that the trend will continue globally (Radetzki & Wårell, 2021). As the global economy expands, people can earn and spend more, implying that people’s spending capacity will continue to increase. The trend has triggered a subsequent change in how people spend their money, with more people than ever before interested in reaching new destinations. This reality represents an opportunity for destination development companies to expand their services due to increased tourism demand.
Secondly, the sharing economy has changed how people view tourist destinations. According to Radetzki and Wårell (2021), the sharing economy refers to recent trends in exchanging goods and services online through modern platforms like Airbnb and Uber. In this regard, the sharing economy has altered how people travel and access new destinations. For example, Airbnb services are now relatively cheaper than traditional hospitality packages. Platforms like Airbnb and Uber attract people wishing to travel on a budget, thus endangering the survival of traditional hotels. Destination development efforts should now ensure that they analyze how the sharing economy impacts package pricing and the ability of people to move from one area to another.
An analysis of the socio-cultural factors affecting destination development considers the impacts of social pressures and racial acceptance. Today, most people feel pressured to travel to new destinations, especially with the advent of social media (Bush, 2019). With an ever-burgeoning online presence across platforms like Instagram, Facebook, and Snapchat, most people now feel the need to impress their peers. As more people put aside resources for travel, these companies can continually create attractive packages for global tourists. Another critical factor to consider is racial and diversity acceptance. The continued use of social media and the effects of globalization have allowed people from all walks of life to interact and move from one place to another. Today, racial, sexual, and religious diversity has become commonplace, which eases the traveling experience. As more countries embrace diversity, it will be easier for destination development agencies to undertake their work. However, racial, sexual, and religious prejudices can threaten the tourism industry at large.
The main technological factors to consider are better transport and computer systems. Since the industry started, transport has been one of the biggest influencers of tourist travel (Bush, 2019). As transport networks modernize and improve, travelers find it easier to move from one point to another. As earlier stated, the advent of railway, road, and air transport significantly boosted tourism. Governments today are majorly concerned about the improvement of transport infrastructure to accommodate more tourists. Consequently, travelers have numerous transport options than ever before. Information technology through computer systems has also improved the nature of modern hospitality and tourism. According to Timothy (2019), the advantage of information technology is that it helps reduce costs, augments operational efficiency, and better customer experience. Destination development agencies can thus leverage these new technological advancements to offer better tourist packages to customers. It is vital for tourism businesses and affiliated organizations to utilize social media, online advertising, online purchasing, and blogs to enhance customer convenience.
Another issue to consider for destination development is the nature of the legal environment. According to Rodríguez-Díaz and Espino-Rodríguez (2019), the legal structure encompassing tourism and transport legislation can negatively or positively influence destination development in any country. For example, countries operating in the European Union should adhere to regulations present within specific areas. These rules govern issues such as land use planning, labor, health and food safety, the environment, and consumers (Pitcher, 2017). Businesses running tourist activities should adhere to laws that oversee destination planning and management, promotion activities, and tourism inspection competencies. It is vital to add that the legal environment within a region or country also regulates visa issues and thus affects the number and nature of visitors that arrive for business, events, or conferences.
Finally, environmental factors include transport pollution and tourist negligence. Bush (2019) posits that pollution is the most critical environmental issue that impacts modern tourism and destination development activities. When tourists travel from destination to destination, the busses, trains, planes, and other transportation modes they use emit fumes into the atmosphere, causing environmental pollution. The usage of these services also causes water and noise pollution, which can be as devastating as air pollution. Therefore, destination development agencies need to consider the environmental effects of their actions. As these organizations make tourism plans, they should ensure the use of environmentally friendly processes such as renewable energy and other sustainable practices.
In summary, the PESTEL analysis shows that destination development practices have both positive and negative aspects. Examples of positive influences are the opening up of borders, relatively stable governments, tax incentives in most destinations, the growth of disposable incomes, the expansion of the sharing economy, social media pressure, and racial diversity. Technological enhancements also aid destination development. However, tourism companies should watch out for pollution factors that could affect sustainability in the long run.
The Need for Destination Management
Despite the presence of negative factors affecting destination management, the process has a significant role in the development of tourist destinations. Destination management can continuously enhance top tourist destinations by providing services during peak and off-peak seasons. For example, in Croatia, destination marketing organizations have helped increase tourist numbers and their perception of the country (Batinić, 2018). These efforts have positioned Croatia as one of the leading destinations in Eastern Europe. The author mentions that destination management has triggered several tangible advantages with the help of destination marketing organizations.
First, the process has allowed the tourism industry to organize and host various congressional activities that require high levels of creativity and responsibility (Batinić, 2018). Congressional activities occur with the help of accommodation companies and congresses that stimulate the effective growth of congress tourism in Croatia. Second, destination marketing organizations employ top event managers to manage different attractions or events globally (Batinić, 2018). These experts bring much-needed theoretical and managerial knowledge, which enhances tourism levels on a global scale. Any high-quality event can enhance a destination’s reputation, attract media attention, and generate profits. Thirdly, destination management enhances educational levels within any locality. For example, when a global destination marketing organization organizes an event with educational content, the educational competencies of attendees can be enhanced.
Moreover, destination management allows global businesses to organize team-building exercises. Team building is essential for companies because it allows them to create stronger employee relationships, which helps improve productivity, enhances employee motivation, improves collaborativeness, and encourages employees to trust one another (Batinić, 2018). Finally, embracing a destination management viewpoint allows destinations and their communities to cater to changing social and environmental conditions. For example, in New Zealand, there is an urgent need for tourism to support the creation of local jobs and embrace diversity. Destination management processes have increased the number of tourists visiting the country, both in peak and off-peak seasons (Rutherford, 2020). These efforts have increased the number of natives working across various tourism companies. Therefore, destination management is a vital service due to its benefits within and outside tourism.
The Emergence of Destination Marketing Organization (DMOs) at Local and International Levels
Today, the rise of destination marketing organizations has enhanced productivity and collaborativeness within the tourism industry. These organizations have augmented destination management practices globally. According to Fesenmaier and Xiang (2018), countries can embrace three types of tourism organizations to enhance destination management: DMOs, government agencies, and private sector umbrella companies. All three organization types work hand in hand to advance the industry. However, DMOs are responsible for tourism promotion and advertising. The author adds that DMOs have four basic levels. The first is the National Tourism Office (NTO), tasked with the overall national marketing of major tourist destinations. The second DMO type is the State Tourism Office (STO), tasked with promoting tourism within a state, territory, or province. STOs primarily occur in countries like the United States and Canada.
The third type is the Regional Tourism Organization (RTO), tasked with promoting destinations within specific regions such as towns, cities, or coastal areas. It is vital to note that RTOs have different names depending on the host countries. For instance, in the United States, RTOs go by the title convention and visitor bureau (CVB), while the United Kingdom refers to them as regional tourism boards (RTB). The final types of DMOs are the Local Tourism Offices (LTOs), tasked with promoting tourism within a specific locality. For example, an LTO can occur in an American county operating under a local government.
It is vital to add that DMOs have varied business models. The first business model operates as government agencies (GAs), especially in Latin American, European, and Asian countries. National or local authorities tasked with managing destinations run GAs (Wang & Pizam, 2016). The second business model is the Government-Funded Non-Profit Organizations (GFNPOS) which is commonplace in Canada and the United States. These organizations operate as separate business entities and are free to use their resources as they please (Wang & Pizam, 2016). The third model includes Dual-Funded Non-Profit Organizations (DFNPOS), which receive resources from governments, local service providers, or well-wishers. The final model entails the Members-Only Trade Associations (MOTAs), mainly found within small regions. According to Wang and Pizam (2016), MOTAs are ideal for areas not formally recognized as major tourist destinations. In such cases, various businesses form coalitions and market destinations by themselves. Sometimes, tourist promotion activities are handled by the local chamber of commerce or related business entities.
The Evolution from Destination Management Company (DMC) to Destination Marketing Organizations (DMO)
It is vital to add that destination management stakeholders should differentiate between Destination Management Companies (DMCs) and Destination Marketing Organizations (DMOs). While DMOs are responsible for promoting tourism activities within localities, regions, and nations, DMCs are third-party firms that engage in the professional organization and implementation of events out of town (Fesenmaier & Xiang, 2018). DMCs rely on their wide-ranging understanding of local areas and the unique relationships between local resources and community members. DMCs are particularly important for corporate events such as team-building exercises or school field trips.
It is vital to add that event planners are the most common users of DMCs. According to Fesenmaier and Xiang (2018), DMCs make it easier for event planners to organize out-of-town events due to the conveniences. For example, DMCs have an expansive knowledge of local catering services, hotels, and transportation networks, making it easier for event planners to coordinate activities. Secondly, local planners are aware of the overarching social norms within a given locality, which can help out-of-town event planners avoid aggravating local communities. Finally, DMCs can help enhance the quality of event planners’ service offerings due to their experience in managing specific types of events.
However, the focus has since moved from DMCs to DMOs in the modern context. Although DMCs are essential in event planning, DMOs are far-reaching and more effective promoters of destination development (Fesenmaier & Xiang, 2018). For example, Kuoni Destination Management is a Miami-based DMC offering tourist packages to European sports finals, virtual events, award ceremonies in Paris, and automobile product launches in Milan (Kuoni Destination Management, 2021). Although the company offers services globally, its overall reach is limited. However, a DMO such as the National Travel and Tourism Office in the United States has more resources and outreach. A major comparison is that DMOs have important roles in national tourist policy formulation, which enhances the reputation and importance worldwide. In contrast, DMCs only promote specific events, implying that they do not engage in policy making within the tourism industry.
The Factors that Influence the Performance of DMCs
Finally, there is a further need to analyze the factors determining the success of DMCs. According to Timothy (2019), these factors are strategic planning, unique selling points, destination access, the nature of attractions, and leadership. Strategic planning allows for the consistent marketing of destinations and the development of income-boosting channels. Strategic planning also allows these companies to remain sustainable in the long run. Second, DMCs can only thrive in areas with available and cheap transportation systems. Most customers want destination travels that are convenient and that do not have transportation challenges.
Third, DMCs must have unique selling points. Unique selling points refer to the company’s identity that makes it stand out from others (Timothy, 2019). Companies that have impressive brand presence are likely to attract more customers than those that do not. Fourth, a DMC will only do well if it sells attractive tourist destinations (Timothy, 2019). As can be expected, quality offerings are attractive prospects for tourists. Examples are beaches, infrastructure, museums, and old towns. Finally, the success of DMCs depends on industrial leadership (Timothy, 2019). When industries support local, regional, or national tourism, DMCs can thrive and enhance their clientele. Leaders have to coordinate the tourism and hospitality industries for DMCs to succeed. Such coordination requires continuous strategic planning to ensure that both industries remain sustainable in the long run.
An analysis of destination management shows that destination management is a local, regional, and national priority that can continuously enhance top tourist destinations by providing services during peak and off-peak seasons, that DMOs are more effective than DMCs, and that the success of DMCs depends on strategic planning, unique selling points, destination access, the nature of attractions, and leadership. Destinations are best protected and enhanced through destination management, the all-rounded approach to managing tourist destinations via coordinated processes. A PESTEL analysis shows that destination development practices have both positive and negative aspects, such as opening borders, tax incentives in most destinations, social media pressure, and pollution. Given its burgeoning significance, results also show that DMOs are more effective than DMCs.
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