Description
This presentation explain how to succeed as a tourism destination in a volatile world.
The Travel & Tourism Competitiveness Report 2013 | 43
CHAPTER 1.2
How to Succeed as
a Tourism Destination
in a Volatile World
JÜRGEN RINGBECK
TIMM PIETSCH
Booz & Company
After the financial crisis of 2007–08, the global economy
faced its deepest setback in decades. Although
economies have recovered, volatility has remained a key
risk to further development—financially, economically,
politically, and environmentally. Sovereign debt crunches
get worse, political instability is growing in the world’s hot
zones, and environmental disasters tend to grow more
severe in their short-term impacts.
In addition, other forces—less dramatic but no
less powerful—continue to reshape the world’s future.
The ongoing digitization of daily life has sped up
the dissemination of news; as a result, consumers
are developing more flexible buying decisions and
conventional ways of doing business are being
fundamentally challenged. Established economies are
increasingly feeling the impact of aging populations
through the growing pressure on social care systems
and the changing requirements needed to meet the
mobility, housing, and leisure habits of older people. At
the same time, new demand is unfolding in developing
regions such as the BRIC countries (Brazil, Russia,
India, and China) and beyond, changing the profile of
the international traveler. All these changes will have
significant impacts on tourism destinations (Figure 1).
Policymakers responsible for developing and
growing their nations as successful tourism destinations
face a large variety of change drivers in their home
countries and in key tourism source markets. They
will need progressively more and more sophisticated
methods to nurture the development of the tourism
sector successfully by increasing inbound tourism. In
a world that is ever more volatile and an environment
that is ever changing, new capabilities in tourism
management and sector development are vital if an
economy is to become more resilient against disruptive
events and to prepare for long-term stability.
Long-established destination-management
techniques such as advertising campaigns or the
presence of industry fairs are increasingly being
displaced. Communicating with travelers online through
various direct or indirect channels requires many
destination managers and developers to redesign their
existing marketing capabilities.
At the same time, destinations need to rethink their
positioning among competing countries to prepare
for short-term demand shocks and long-term shifts of
traveler flows. In the past, a narrow focus on attracting
the maximum number of budget tourists in markets
such as those of Bulgaria, Egypt, and Spain drove
strong growth. However, this focus brings extensive
risks, including break-neck competition, environmental
exploitation, and unhealthy investment bubbles.
Moreover, investment in infrastructure faces new
obstacles. Ecological, regulatory, fiscal, and sociopolitical
constraints often hinder ambitious expansion. Large-
scale projects are increasingly complex and difficult
© 2013 World Economic Forum
to manage. Examples of such large projects that have
proven unwieldy are recent European rail and airport
projects such as the Berlin airport, which has had
multiple problems and delays.
Many destinations are still catering their touristic
offerings to very few, mature source markets—and such
destinations risk losing touch with tourists from emerging
source regions such as Asia, Russia, or Latin America,
whose needs differ significantly from those of the typical
Western traveler. For example, introducing sophisticated
methods of demand segmentation and profiling to attract
the growing number of Chinese travelers will become
increasingly important.
All these challenges have affected Travel & Tourism
(T&T) in recent years, but they have not stopped the
overall dynamic in the sector, which is driven by desire to
travel abroad, visit foreign places, or just relax. Travel &
Tourism remains a strong engine of growth, representing
nearly 10 percent of global economic activity if all
adjacent services are taken into account. Instability is
a new reality that carries opportunities as well as risk.
This is why tourism destinations, policymakers, and
private-sector stakeholders need to act decisively to
develop the right capabilities to succeed going forward.
SEPARATING DIFFERENTIATORS FROM ENABLERS
The Travel & Tourism Competitiveness Index (TTCI)
described in Chapter 1.1 measures a variety of criteria
that enable the competitiveness of economies in driving
inbound tourism growth—including natural scenery;
proper, well-maintained infrastructure; and sound,
open-market policies. Some factors qualify a country
only to compete for tourists, while others create true
differentiation among potential destinations to achieve
long-term attractiveness for foreign visitors.
The building blocks of any tourism destination are
assets such as natural scenery and cultural heritage as
well as properly functioning infrastructure that allows
travelers to access a country and move comfortably
within it. Without these building blocks, a country
cannot compete in the global tourism market. However,
these assets require significant investment in terms
of conservation (in the case of natural treasures) and
maintenance (in the case of physical infrastructure,
Figure 1: Travel & Tourism competitiveness enablers and change drivers
Source: Booz & Company.
1.2: How to Succeed as a Tourism Destination in a Volatile World
44 | The Travel & Tourism Competitiveness Report 2013
E
X
TERNAL CHANGE/DRIVE
R
S
F
A
C
T
O
R
S
O
F
T
R
A
VEL & TOURISM
CO
M
P
E
T
IT
IV
E
N
E
S
S
Environmental
sustainability
Cultural
resources
Natural
resources
Prioritization
of Travel & Tourism
Safety
and security
Health
and hygiene
Human
resources
ICT
infrastructure
Price competitiveness in the
Travel & Tourism industry
Affinity for
Travel & Tourism
Policy rules
and regulations
Tourism
infrastructure
Air transport
infrastructure
Ground transport
infrastructure
Accelerating trends
Inflation/exchange
rates
Digitization/mobile
devices
Economic downturn
(“double dip”)
Political instability
Disruptive events
Natural disasters
Terrorism
Regional demand
shifts
Aging population
TRAVEL & TOURISM
COMPETITIVENESS
© 2013 World Economic Forum
which tends to lose value over time). Policymakers need
to develop long-term plans in order to best cater for
inbound tourism flows. But these efforts alone do not
generate true differentiation from other countries that
are doing exactly the same thing. To build advantage
over competing countries, policymakers and destination
managers need to identify and leverage capabilities that
make their destination distinctive.
This chapter examines the connection between
T&T competitiveness (as measured by the TTCI) and a
score on how dynamic and stable inbound tourism has
developed in a given country (Travel & Tourism Stable
Growth Performance Score—see Box 1) over the past
five years.
An examination of the 20 highest- and lowest-
ranked economies in the TTCI shows which pillars
of tourism competitiveness have proven to be most
effective in driving stable inbound tourism growth
(Figure 2). For example, a high score in the TTCI indicator
Affinity for Travel & Tourism also means a high score in
stable growth performance of tourism development in
recent years. These factors are true differentiators that
create a strong stable growth record in the inbound
tourism industry.
The results reinforce the idea that policymakers
have the means to steer their tourism destination toward
resilience against short-term shocks and prepare for
long-term stability by focusing on certain areas where
leading countries stand out over their underperforming
peers. Best-practice policies and sector-development
strategies from highly competitive tourism destinations
have proven successful in weathering the economic
downturn and preparing for more volatility going
forward. Each country should identify its specific key
areas of tourism opportunities and align its policy focus
around these core capabilities. These differentiators are
diverse—reflecting a mixture of international travel needs
and experiences—and range from reestablishing the
trust of visitors after periods of instability and maintaining
price competitiveness in uncertain market surroundings
to making sustainability a winning factor and turning
an affinity for tourism into successful destination
development.
We have identified the 5 (out of 14) pillars from the
TTCI that are correlated most closely with our Stable
Growth Performance Score (Figure 3); in the reminder of
this section we describe them in greater detail.
Building on their existing Affinity for Travel &
Tourism, policymakers should aim to generate a
positive climate for tourism and tie tourism businesses
closely to the overall economy—apart from large-scale
investments or infrastructure expansion. Going forward,
fully supporting local communities, small businesses,
and individual entrepreneurs will be key to converting
openness to foreign visitors into developing touristic
services that collectively make a destination distinctive.
In addition, encouraging tourists to return requires a
holistic view of the traveler lifecycle rather than one-size-
fits-all campaigning. Australia, for instance, connects
young people to its country by offering “work & travel”
opportunities through various local businesses; as these
travelers mature and have more money to spend, they
want to return.
Policymakers need to strengthen their core area of
competence—Policy rules and regulations—with a clear
focus on long-term approaches to tourism development
combined with agility in reacting to short-term changes.
To realize the full potential of the tourism sector, it will
be critical to lower existing entry barriers in terms of
infrastructure or visa regulations, drive private-sector
investment through further liberalization, and empower
local communities to participate in the tourism value
chain, as well as establish cross-border cooperation with
other destinations. For instance, Ireland has launched a
national program called “The Gathering Ireland” through
which businesses, sport clubs, cultural establishments,
and local authorities are asked to showcase ideas on
how best to attract travelers to the country—with the
ultimate goal of promoting an economic revival after the
crisis with tourism as one of its cornerstones.
Price competitiveness will certainly remain a key
differentiator across a variety of dimensions. On the
macro level, exchange rate fluctuations will continue
to be a major and unpredictable factor that influences
travel behavior. These fluctuations will have a particularly
severe impact on destinations that focus on “budget
travelers” who are less loyal to specific destinations
than they are keen on finding inexpensive traveling
opportunities. Today, tourists enjoy near-perfect
Box 1: The Travel & Tourism Stable Growth
Performance Score
Booz & Company has calculated a Travel & Tourism Stable
Growth Performance Score based on international tourist
arrivals data from the World Tourism Organization in a
sample group of 74 most-visited countries in 2011 as the
foremost measure of inbound tourism performance. We
define stable growth performance as the simple average
of inbound tourism growth (the compound annual growth
rate in the period of 2007–11) and the volatility of growth
(the standard deviation of annual growth rates in the
same period) per economy. Economies with high growth
rates and low volatility rates score high, and vice versa.
To differentiate competitiveness enablers for destinations
with developed and developing tourism, we have focused
on the 20 highest- and lowest-ranked economies in the
Travel & Tourism Competitiveness Index (TTCI) based
on the 2008, 2009, 2011, and 2013 editions. For each
of these two groups, we have calculated the correlation
factor of their TTCI pillar scores with our Stable Growth
Performance Score.
The Travel & Tourism Competitiveness Report 2013 | 45
1.2: How to Succeed as a Tourism Destination in a Volatile World
© 2013 World Economic Forum
Figure 2: Top five T&T competitiveness enablers by impact on stable growth, developed and emerging economies
0.0 0.1 0.2 0.3 0.4 0.5
Prioritization of
Travel & Tourism
Ground transport
infrastructure
Policy rules
and regulations
Af?nity for
Travel & Tourism
Price competitiveness
in the T&T industry
?
?
?
Developed economies
0.0 0.1 0.2 0.3 0.4 0.5
Cultural
references
Prioritization of
Travel & Tourism
Af?nity for
Travel & Tourism
Safety
and security
Environmental
sustainability
?
?
Emerging economies
Sources: UNWTO 2012; World Economic Forum various years; Booz & Company analysis.
Note: The data show the correlation of factors of the Travel & Tourism Stable Growth Performance Score and the Travel & Tourism Competitiveness Index ( TTCI) score. Only the highest
correlation results are shown for the 20 highest- and lowest-ranking economies according to the TTCI. Check marks indicate those categories we consider to be differentiating in terms of T&T
competitiveness and growth.
price-versus-quality transparency through user-
generated online reviews. Tourism planners need to
make pricing for inbound tourism more flexible and
should ease access to a country by tax reduction if and
when needed. They should also support local investment
and entrepreneurship with financial incentives such as
investment aid or other support measures. Destinations
and private businesses need to respond both to
bargain seekers and to increasing demand for more
sophisticated travel experiences in order to best leverage
their touristic assets. Turkey, for example, has excelled in
establishing itself as a mainstream destination for many
Europeans (especially travelers from the United Kingdom
but also those from Russia); at the same time, it has
diversified its touristic offerings, leveraging its diverse
culture, history, and natural scenery.
Finally, developing and fostering more varied forms
of travel can transform Environmental sustainability
from a regulatory burden to a true differentiator for
tourism source markets. Policymakers, especially those
in developing tourism destinations, should prioritize
long-term sustainability to safeguard their natural
and cultural assets because “green consumerism”
has become a significant buying power in developed
markets. Key emerging tourist groups, including the well-
traveled retiring baby boomers, are demanding green
travel offerings instead of traditional sun-and-beach
vacations. A clear focus on greening the supply side of
tourism as well as environmental conservation efforts
on a national level will generate clear advantages over
competing destinations. Policymakers need to be able to
consistently match long-term tourism master planning,
short-term interests of multiple stakeholders, and
external influences such as macroeconomic events or
tourist demand changes to make tourism sustainable—
economically and environmentally. To succeed,
policymakers will need to manage the bottleneck of
natural assets carefully to put economic yield and
ecological footprint into a steady, stable state. In Kenya,
the Seychelles, and Tanzania, for example, ecotourism
has gained traction in recent years, growing from a niche
segment to a high-yield volume market. These countries
preserve their natural assets for responsible tourism,
which drives economic growth on both the national and
local level.
It goes without saying that Safety and security
is clearly linked to inbound tourism well-being just
to “stay in the game.” This is especially important in
developing regions that suffer from political instability
or governmental inefficiencies, which can often result in
high crime rates and stunted economic development.
The recent Arab Spring movement led to severe drops
in visitors to tourism-focused economies, particularly in
Egypt and Tunisia; by contrast, Morocco has weathered
the crisis considerably well, with only minor drops in
inbound tourism, by quickly introducing political reform
instead of confrontation and by continuing to focus on
its long-term tourism development strategy. However,
the battle against crime on various levels—whether in
the form of street crime that is evident in deteriorating
Correlation coefficient Correlation coefficient
1.2: How to Succeed as a Tourism Destination in a Volatile World
46 | The Travel & Tourism Competitiveness Report 2013
© 2013 World Economic Forum
Figure 3: Key capabilities that drive T&T stable growth performance
Source: World Economic Forum; Booz & Company.
DIFFERENTIATOR BEST-PRACTICE CAPABILITIES
?
Affinity for Travel & Tourism
• Customer orientation
• Openness to foreign visitors
• Local stakeholder involvement
?
Policy rules and regulations
• Low entry barriers
• Sector liberalization
• Private/public sector cooperation
?
Price competitiveness in the T&T
industry
• Affordable touristic offerings & hotels
• Taxation levels
• Purchasing power/exchange rates
?
Environmental sustainability
• Sustainability policies and regulations
• Private-sector innovations
• Nature conservation
?
Safety and security
• Protection of touristic areas/facilities
• Reliability of authorities
• Trust-building campaigns
The Travel & Tourism Competitiveness Report 2013 | 47
1.2: How to Succeed as a Tourism Destination in a Volatile World
security for travelers or corruption that affects
businesses—will remain an ongoing challenge for many
developing destinations in their pursuit of unhampered
destination development.
CONCLUSION
To prevail under more volatile market conditions and
continue benefitting from a vibrant tourism sector,
policymakers should identify and focus on their country’s
key competitive advantages over other countries and
differentiate the traveler’s experience in their country
from the experience to be had elsewhere. At the
same time, they should monitor the shifting trends in
international customer origins and profiles. It is important
to examine existing destination marketing and tourism
development planning in the context of the challenges of
a more volatile macroeconomic environment. Established
destinations need to pool their efforts on innovations,
multi-stakeholder cooperation, and flexibility if they
are to respond successfully to demand from emerging
regions. Developing destinations should consider
effective short-term turnaround strategies to strengthen
their T&T sectors and reestablish their attraction for
the international traveler by focusing on long-term
sector development and making sustainability a core of
destination development and marketing.
Despite increasing instability induced by economic,
political, and environmental challenges, tourism
is expected to remain a significant driver of future
economic growth. Policymakers who concentrate on
their countries’ most prominent assets and are able
to leverage them most effectively are best positioned
to turn volatility risks into opportunities for long-term
stability.
REFERENCES
UNWTO (World Tourism Organization). 2012. Tourism Highlights, 2012
Edition. Available athttp://www.unwto.org/pub/index.htm.
World Economic Forum. Various years. The Travel & Tourism
Competitiveness Report. Geneva: World Economic Forum.
© 2013 World Economic Forum
doc_382173896.pdf
This presentation explain how to succeed as a tourism destination in a volatile world.
The Travel & Tourism Competitiveness Report 2013 | 43
CHAPTER 1.2
How to Succeed as
a Tourism Destination
in a Volatile World
JÜRGEN RINGBECK
TIMM PIETSCH
Booz & Company
After the financial crisis of 2007–08, the global economy
faced its deepest setback in decades. Although
economies have recovered, volatility has remained a key
risk to further development—financially, economically,
politically, and environmentally. Sovereign debt crunches
get worse, political instability is growing in the world’s hot
zones, and environmental disasters tend to grow more
severe in their short-term impacts.
In addition, other forces—less dramatic but no
less powerful—continue to reshape the world’s future.
The ongoing digitization of daily life has sped up
the dissemination of news; as a result, consumers
are developing more flexible buying decisions and
conventional ways of doing business are being
fundamentally challenged. Established economies are
increasingly feeling the impact of aging populations
through the growing pressure on social care systems
and the changing requirements needed to meet the
mobility, housing, and leisure habits of older people. At
the same time, new demand is unfolding in developing
regions such as the BRIC countries (Brazil, Russia,
India, and China) and beyond, changing the profile of
the international traveler. All these changes will have
significant impacts on tourism destinations (Figure 1).
Policymakers responsible for developing and
growing their nations as successful tourism destinations
face a large variety of change drivers in their home
countries and in key tourism source markets. They
will need progressively more and more sophisticated
methods to nurture the development of the tourism
sector successfully by increasing inbound tourism. In
a world that is ever more volatile and an environment
that is ever changing, new capabilities in tourism
management and sector development are vital if an
economy is to become more resilient against disruptive
events and to prepare for long-term stability.
Long-established destination-management
techniques such as advertising campaigns or the
presence of industry fairs are increasingly being
displaced. Communicating with travelers online through
various direct or indirect channels requires many
destination managers and developers to redesign their
existing marketing capabilities.
At the same time, destinations need to rethink their
positioning among competing countries to prepare
for short-term demand shocks and long-term shifts of
traveler flows. In the past, a narrow focus on attracting
the maximum number of budget tourists in markets
such as those of Bulgaria, Egypt, and Spain drove
strong growth. However, this focus brings extensive
risks, including break-neck competition, environmental
exploitation, and unhealthy investment bubbles.
Moreover, investment in infrastructure faces new
obstacles. Ecological, regulatory, fiscal, and sociopolitical
constraints often hinder ambitious expansion. Large-
scale projects are increasingly complex and difficult
© 2013 World Economic Forum
to manage. Examples of such large projects that have
proven unwieldy are recent European rail and airport
projects such as the Berlin airport, which has had
multiple problems and delays.
Many destinations are still catering their touristic
offerings to very few, mature source markets—and such
destinations risk losing touch with tourists from emerging
source regions such as Asia, Russia, or Latin America,
whose needs differ significantly from those of the typical
Western traveler. For example, introducing sophisticated
methods of demand segmentation and profiling to attract
the growing number of Chinese travelers will become
increasingly important.
All these challenges have affected Travel & Tourism
(T&T) in recent years, but they have not stopped the
overall dynamic in the sector, which is driven by desire to
travel abroad, visit foreign places, or just relax. Travel &
Tourism remains a strong engine of growth, representing
nearly 10 percent of global economic activity if all
adjacent services are taken into account. Instability is
a new reality that carries opportunities as well as risk.
This is why tourism destinations, policymakers, and
private-sector stakeholders need to act decisively to
develop the right capabilities to succeed going forward.
SEPARATING DIFFERENTIATORS FROM ENABLERS
The Travel & Tourism Competitiveness Index (TTCI)
described in Chapter 1.1 measures a variety of criteria
that enable the competitiveness of economies in driving
inbound tourism growth—including natural scenery;
proper, well-maintained infrastructure; and sound,
open-market policies. Some factors qualify a country
only to compete for tourists, while others create true
differentiation among potential destinations to achieve
long-term attractiveness for foreign visitors.
The building blocks of any tourism destination are
assets such as natural scenery and cultural heritage as
well as properly functioning infrastructure that allows
travelers to access a country and move comfortably
within it. Without these building blocks, a country
cannot compete in the global tourism market. However,
these assets require significant investment in terms
of conservation (in the case of natural treasures) and
maintenance (in the case of physical infrastructure,
Figure 1: Travel & Tourism competitiveness enablers and change drivers
Source: Booz & Company.
1.2: How to Succeed as a Tourism Destination in a Volatile World
44 | The Travel & Tourism Competitiveness Report 2013
E
X
TERNAL CHANGE/DRIVE
R
S
F
A
C
T
O
R
S
O
F
T
R
A
VEL & TOURISM
CO
M
P
E
T
IT
IV
E
N
E
S
S
Environmental
sustainability
Cultural
resources
Natural
resources
Prioritization
of Travel & Tourism
Safety
and security
Health
and hygiene
Human
resources
ICT
infrastructure
Price competitiveness in the
Travel & Tourism industry
Affinity for
Travel & Tourism
Policy rules
and regulations
Tourism
infrastructure
Air transport
infrastructure
Ground transport
infrastructure
Accelerating trends
Inflation/exchange
rates
Digitization/mobile
devices
Economic downturn
(“double dip”)
Political instability
Disruptive events
Natural disasters
Terrorism
Regional demand
shifts
Aging population
TRAVEL & TOURISM
COMPETITIVENESS
© 2013 World Economic Forum
which tends to lose value over time). Policymakers need
to develop long-term plans in order to best cater for
inbound tourism flows. But these efforts alone do not
generate true differentiation from other countries that
are doing exactly the same thing. To build advantage
over competing countries, policymakers and destination
managers need to identify and leverage capabilities that
make their destination distinctive.
This chapter examines the connection between
T&T competitiveness (as measured by the TTCI) and a
score on how dynamic and stable inbound tourism has
developed in a given country (Travel & Tourism Stable
Growth Performance Score—see Box 1) over the past
five years.
An examination of the 20 highest- and lowest-
ranked economies in the TTCI shows which pillars
of tourism competitiveness have proven to be most
effective in driving stable inbound tourism growth
(Figure 2). For example, a high score in the TTCI indicator
Affinity for Travel & Tourism also means a high score in
stable growth performance of tourism development in
recent years. These factors are true differentiators that
create a strong stable growth record in the inbound
tourism industry.
The results reinforce the idea that policymakers
have the means to steer their tourism destination toward
resilience against short-term shocks and prepare for
long-term stability by focusing on certain areas where
leading countries stand out over their underperforming
peers. Best-practice policies and sector-development
strategies from highly competitive tourism destinations
have proven successful in weathering the economic
downturn and preparing for more volatility going
forward. Each country should identify its specific key
areas of tourism opportunities and align its policy focus
around these core capabilities. These differentiators are
diverse—reflecting a mixture of international travel needs
and experiences—and range from reestablishing the
trust of visitors after periods of instability and maintaining
price competitiveness in uncertain market surroundings
to making sustainability a winning factor and turning
an affinity for tourism into successful destination
development.
We have identified the 5 (out of 14) pillars from the
TTCI that are correlated most closely with our Stable
Growth Performance Score (Figure 3); in the reminder of
this section we describe them in greater detail.
Building on their existing Affinity for Travel &
Tourism, policymakers should aim to generate a
positive climate for tourism and tie tourism businesses
closely to the overall economy—apart from large-scale
investments or infrastructure expansion. Going forward,
fully supporting local communities, small businesses,
and individual entrepreneurs will be key to converting
openness to foreign visitors into developing touristic
services that collectively make a destination distinctive.
In addition, encouraging tourists to return requires a
holistic view of the traveler lifecycle rather than one-size-
fits-all campaigning. Australia, for instance, connects
young people to its country by offering “work & travel”
opportunities through various local businesses; as these
travelers mature and have more money to spend, they
want to return.
Policymakers need to strengthen their core area of
competence—Policy rules and regulations—with a clear
focus on long-term approaches to tourism development
combined with agility in reacting to short-term changes.
To realize the full potential of the tourism sector, it will
be critical to lower existing entry barriers in terms of
infrastructure or visa regulations, drive private-sector
investment through further liberalization, and empower
local communities to participate in the tourism value
chain, as well as establish cross-border cooperation with
other destinations. For instance, Ireland has launched a
national program called “The Gathering Ireland” through
which businesses, sport clubs, cultural establishments,
and local authorities are asked to showcase ideas on
how best to attract travelers to the country—with the
ultimate goal of promoting an economic revival after the
crisis with tourism as one of its cornerstones.
Price competitiveness will certainly remain a key
differentiator across a variety of dimensions. On the
macro level, exchange rate fluctuations will continue
to be a major and unpredictable factor that influences
travel behavior. These fluctuations will have a particularly
severe impact on destinations that focus on “budget
travelers” who are less loyal to specific destinations
than they are keen on finding inexpensive traveling
opportunities. Today, tourists enjoy near-perfect
Box 1: The Travel & Tourism Stable Growth
Performance Score
Booz & Company has calculated a Travel & Tourism Stable
Growth Performance Score based on international tourist
arrivals data from the World Tourism Organization in a
sample group of 74 most-visited countries in 2011 as the
foremost measure of inbound tourism performance. We
define stable growth performance as the simple average
of inbound tourism growth (the compound annual growth
rate in the period of 2007–11) and the volatility of growth
(the standard deviation of annual growth rates in the
same period) per economy. Economies with high growth
rates and low volatility rates score high, and vice versa.
To differentiate competitiveness enablers for destinations
with developed and developing tourism, we have focused
on the 20 highest- and lowest-ranked economies in the
Travel & Tourism Competitiveness Index (TTCI) based
on the 2008, 2009, 2011, and 2013 editions. For each
of these two groups, we have calculated the correlation
factor of their TTCI pillar scores with our Stable Growth
Performance Score.
The Travel & Tourism Competitiveness Report 2013 | 45
1.2: How to Succeed as a Tourism Destination in a Volatile World
© 2013 World Economic Forum
Figure 2: Top five T&T competitiveness enablers by impact on stable growth, developed and emerging economies
0.0 0.1 0.2 0.3 0.4 0.5
Prioritization of
Travel & Tourism
Ground transport
infrastructure
Policy rules
and regulations
Af?nity for
Travel & Tourism
Price competitiveness
in the T&T industry
?
?
?
Developed economies
0.0 0.1 0.2 0.3 0.4 0.5
Cultural
references
Prioritization of
Travel & Tourism
Af?nity for
Travel & Tourism
Safety
and security
Environmental
sustainability
?
?
Emerging economies
Sources: UNWTO 2012; World Economic Forum various years; Booz & Company analysis.
Note: The data show the correlation of factors of the Travel & Tourism Stable Growth Performance Score and the Travel & Tourism Competitiveness Index ( TTCI) score. Only the highest
correlation results are shown for the 20 highest- and lowest-ranking economies according to the TTCI. Check marks indicate those categories we consider to be differentiating in terms of T&T
competitiveness and growth.
price-versus-quality transparency through user-
generated online reviews. Tourism planners need to
make pricing for inbound tourism more flexible and
should ease access to a country by tax reduction if and
when needed. They should also support local investment
and entrepreneurship with financial incentives such as
investment aid or other support measures. Destinations
and private businesses need to respond both to
bargain seekers and to increasing demand for more
sophisticated travel experiences in order to best leverage
their touristic assets. Turkey, for example, has excelled in
establishing itself as a mainstream destination for many
Europeans (especially travelers from the United Kingdom
but also those from Russia); at the same time, it has
diversified its touristic offerings, leveraging its diverse
culture, history, and natural scenery.
Finally, developing and fostering more varied forms
of travel can transform Environmental sustainability
from a regulatory burden to a true differentiator for
tourism source markets. Policymakers, especially those
in developing tourism destinations, should prioritize
long-term sustainability to safeguard their natural
and cultural assets because “green consumerism”
has become a significant buying power in developed
markets. Key emerging tourist groups, including the well-
traveled retiring baby boomers, are demanding green
travel offerings instead of traditional sun-and-beach
vacations. A clear focus on greening the supply side of
tourism as well as environmental conservation efforts
on a national level will generate clear advantages over
competing destinations. Policymakers need to be able to
consistently match long-term tourism master planning,
short-term interests of multiple stakeholders, and
external influences such as macroeconomic events or
tourist demand changes to make tourism sustainable—
economically and environmentally. To succeed,
policymakers will need to manage the bottleneck of
natural assets carefully to put economic yield and
ecological footprint into a steady, stable state. In Kenya,
the Seychelles, and Tanzania, for example, ecotourism
has gained traction in recent years, growing from a niche
segment to a high-yield volume market. These countries
preserve their natural assets for responsible tourism,
which drives economic growth on both the national and
local level.
It goes without saying that Safety and security
is clearly linked to inbound tourism well-being just
to “stay in the game.” This is especially important in
developing regions that suffer from political instability
or governmental inefficiencies, which can often result in
high crime rates and stunted economic development.
The recent Arab Spring movement led to severe drops
in visitors to tourism-focused economies, particularly in
Egypt and Tunisia; by contrast, Morocco has weathered
the crisis considerably well, with only minor drops in
inbound tourism, by quickly introducing political reform
instead of confrontation and by continuing to focus on
its long-term tourism development strategy. However,
the battle against crime on various levels—whether in
the form of street crime that is evident in deteriorating
Correlation coefficient Correlation coefficient
1.2: How to Succeed as a Tourism Destination in a Volatile World
46 | The Travel & Tourism Competitiveness Report 2013
© 2013 World Economic Forum
Figure 3: Key capabilities that drive T&T stable growth performance
Source: World Economic Forum; Booz & Company.
DIFFERENTIATOR BEST-PRACTICE CAPABILITIES
?
Affinity for Travel & Tourism
• Customer orientation
• Openness to foreign visitors
• Local stakeholder involvement
?
Policy rules and regulations
• Low entry barriers
• Sector liberalization
• Private/public sector cooperation
?
Price competitiveness in the T&T
industry
• Affordable touristic offerings & hotels
• Taxation levels
• Purchasing power/exchange rates
?
Environmental sustainability
• Sustainability policies and regulations
• Private-sector innovations
• Nature conservation
?
Safety and security
• Protection of touristic areas/facilities
• Reliability of authorities
• Trust-building campaigns
The Travel & Tourism Competitiveness Report 2013 | 47
1.2: How to Succeed as a Tourism Destination in a Volatile World
security for travelers or corruption that affects
businesses—will remain an ongoing challenge for many
developing destinations in their pursuit of unhampered
destination development.
CONCLUSION
To prevail under more volatile market conditions and
continue benefitting from a vibrant tourism sector,
policymakers should identify and focus on their country’s
key competitive advantages over other countries and
differentiate the traveler’s experience in their country
from the experience to be had elsewhere. At the
same time, they should monitor the shifting trends in
international customer origins and profiles. It is important
to examine existing destination marketing and tourism
development planning in the context of the challenges of
a more volatile macroeconomic environment. Established
destinations need to pool their efforts on innovations,
multi-stakeholder cooperation, and flexibility if they
are to respond successfully to demand from emerging
regions. Developing destinations should consider
effective short-term turnaround strategies to strengthen
their T&T sectors and reestablish their attraction for
the international traveler by focusing on long-term
sector development and making sustainability a core of
destination development and marketing.
Despite increasing instability induced by economic,
political, and environmental challenges, tourism
is expected to remain a significant driver of future
economic growth. Policymakers who concentrate on
their countries’ most prominent assets and are able
to leverage them most effectively are best positioned
to turn volatility risks into opportunities for long-term
stability.
REFERENCES
UNWTO (World Tourism Organization). 2012. Tourism Highlights, 2012
Edition. Available athttp://www.unwto.org/pub/index.htm.
World Economic Forum. Various years. The Travel & Tourism
Competitiveness Report. Geneva: World Economic Forum.
© 2013 World Economic Forum
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