INDICATORS FOR MEASURING COMPETITIVENESS IN TOURISM (OECD)

Tourism competitiveness for a destination is about the ability of the place to optimise its attractiveness for residents and non-residents, to deliver quality, innovative, and attractive (e.g. providing good value for money) tourism services to consumers and to gain market shares on the domestic and global market places, while ensuring that the available resources supporting tourism are used efficiently and in a sustainable way.

Tourism is recognised as one of the key sectors of development in all countries and a major source of income, jobs and wealth creation. It also plays a wider role in promoting the image and international perception of a country externally as well as influencing complementary domestic policies. This range of influence and importance creates challenges in measuring competitiveness in tourism.

Understanding country competitiveness in tourism is a major consideration for policy makers and a major challenge for professionals in providing evidence to inform decision making. Various indicators have been developed by different organisations over the years to address particular aspects of competitiveness but there has remained a lack of an overall measurement framework for competitiveness in tourism for the use of governments.

The influences on competitiveness can change quickly and this dynamic creates further challenges and a need for on-going research and development on indicators. Global economic and tourism trends, including changing market trends and travel behaviours, the role of social media and new sources of demand and growth all increase the importance of the topic and the ability of  countries to compete within the changing global marketplace.

Core indicators

1. Tourism Direct Gross Domestic Product - a comparison of TDGDP change over years is a key statistic of tourism competitiveness and will reinforce use of the TSA. The focus is on direct impacts, domestic and inbound tourism consumption. The challenge for the future is about measuring the indirect and induced impacts. A comparison of TDGDP change over years is perhaps the single most quotable statistic of tourism competitiveness.

2. Inbound tourism revenues per visitor by source market - a measure of the economic activity of visitors identifying the percentage growth or decline year-on-year in inbound tourism revenues per visitor by source market. The focus is on inbound tourism consumption. The challenge is data availability and consistent protocols.

3. Overnights in all types of accommodation - a measure of tourism flows in accommodation, capturing the percentage growth or decline year-on-year in overnights in all types of accommodation or, if not available, in hotels and similar establishments. The focus is on inbound and domestic (internal) tourism economy. The challenge is measuring unregistered and private accommodation.

4. Exports of tourism services - a measure of exports of tourism services and relative performance compared with other sectors, capturing growth or decline year-on-year in value and in percentage. The focus is on inbound tourism consumption. The challenge is to collect detailed data for sub-segments. The measure will show change in performance reflecting competition in terms of brand, value awareness and international appeal.

5. Labour productivity in tourism services - a measure of the level and evolution of productivity of those employed in tourism and the productive potential of the tourism economy shown in a table of productivity measures and growth rates by country. Productivity is a main dimension of competitiveness. The challenge relates to difficulties of measurement, particularly to address quality issues, and the specificity of the tourism sector including the small size of businesses.

6. Purchasing Power Parity (PPPs) and tourism prices - a measure of tourism price level differences across countries expressed as indices with a basis (real or artificial) chosen by country or country group. Changing costs are among the most important competitiveness factors. The challenge is to develop detailed tourism sector specific item groups and prices for individual items.

7. Country entry visa requirements - a measure of entry visa requirements including methods of visa issuance and of the number of visas issued per year and share of inbound tourism arrivals. Traveller mobility is a critical element and visa issues are part of the competitiveness environment. The challenge is to find a suitable format for policy analysis given that visa policies vary considerably across countries.

8. Natural resources and biodiversity - a measure of a country’s stock of natural assets, in terms of the number of recognised natural heritage sites and preserved areas. This should be assessed alongside with information on biodiversity and ecosystems, geographic location and population density. Natural resources are key drivers of attractiveness and offer countries a competitive advantage. The challenge is to identify a consolidated measure.

9. Cultural and creative resources - a composite measure of the number of recognised cultural and creative attractions in different forms. Cultural and creative resources are key drivers of attractiveness. Building a strategy that capitalises on cultural and creative resources can provide competitive advantages. The challenge is to identify a consolidated measure.

10. Visitor satisfaction - a measure of demand side attractiveness value, using a comparable measure of visitor satisfaction rating and intention for repeat visits. Visitor satisfaction is an important qualitative indicator from the demand side. The challenge is to collect data which are based on solid statistical methods and allow comparison over time.

11. National Tourism Action Plan - a competitiveness eligibility indicator that recognises the existence and quality of implementation, effectiveness and evaluation of a National Tourism Action Plan to improve the competitiveness of tourism in a country. The challenge is to see how best to capture the value of the action plan to improve the competitiveness of a destination.

The first four core indicators aim to capture the actual performance contribution and economic market results delivered by tourism. This can then be assessed in terms of relative performance with other sectors and with other countries depending on the angle of competitiveness for policy makers. The next seven core indicators measure inputs and potential contribution to tourism competitiveness.

Supplementary Indicators

1. Market diversification and growth markets: A matrix to show export market coverage and changes in tourism revenues from growth markets. This would consider the number of major markets covered and growth in tourism revenues from these markets.

2. Employment in tourism by age, education levels and type of contracts: Number of jobs in tourism industries defined by age [youth (15-24); prime-age (25-54), older workers(55-64)], by education levels (low skilled, medium skilled, and high skilled), and by type of contract (permanent workers, temporary workers).

3. Consumer price index for tourism: A price index showing a normalised weighted average of prices for a given class of goods or services in a given country/region during a given interval of time. This could use monthly indices, potentially by segments of travel and tourism, showing percentage change on the same period of the previous year and percentage change on the previous period. A number of countries have developed a specific travel and tourism CPI based on identified industrial classification codes to capture defined categories of expenditures. The prices of the chosen travel and tourism components are normally weighted and aggregated according to their proportions in the total tourism expenditures in the country/region.

4. Air connectivity and inter-modality: A measure of international air connectivity based on set criteria  including hub links and inter-modal connections to form an index.

5. OECD Better Life Index:  The BLI is a tool that produces a measure for a country covering a range of considerations relating to individual wellbeing and sustainability of wellbeing over time. The scores and ranking can produce a picture of where individuals view each country.

Future Development Indicators

1. Government budget appropriations for tourism: The measure should capture Government budget appropriation for tourism per capita visitor. All countries with a tourism strategy have a form of annual appropriation, often set with a long term strategic commitment to development and growth of the tourism sector and competitiveness.

 2. Company mortality rate: Per capita/percentage growth or decline year-on-year. Statistics on company mortality figures are typically available from national business registers.

 3. Use of e-tourism and other innovative services: Number of businesses demonstrating innovation through innovation survey evidence and delivering etourism services. This will measure the proportion of businesses within the tourism sector that show defined characteristics of innovation as revealed in an innovation survey. Various countries gather statistics from regular business surveys. This is often supplemented by other sources, including private sector research, to identify levels of innovation, leadership and profile case studies of how competitive advantage is enhanced.

4. Structure of tourism supply chains: An index of industry supply chain strength, recognising the presence of international firms. Use of tourism cluster mapping to show supply chains, strengths and size of firms by segment. The development and application of this measure will make a contribution to the use of the TSA and provide deeper insight to performance and the competitiveness of components and players within the industry in each country.

Areas for Development

1. Branding: Country and destination branding is one of the major tools used to differentiate a country’s tourism offering, especially in ways to maintain or enhance global competitiveness.

2. Weighting and use of Indices:  In a weighted data set each unit is assigned a weighting factor where some data are adjusted to contribute more than others. Deriving appropriate weights for variables involves considerable research and evidence and well as making a number of additional assumptions where evidence is not available.  A number of measures could be suitable for the development of indices that would allow valid competitive positioning measures to be presented for indicators that are not otherwise easily quantifiable or comparable. This could include measures on attractiveness (such as cultural and heritage assets) and accessibility factors as well as customer satisfaction.

3. Quality Considerations: Some countries have established quality mark standards for the industry and sub segments such as accommodation and training qualifications. Also there are a number of national tourism quality agencies that promote use of common methodological tools to assess competitiveness of the sector and defined sub sectors. Individual country approaches to quality classification and competitiveness can work well and play an important role in competitiveness as well as attracting further investment. The explicit quality mark or grading for assets and facilities such as accommodation, attractions, beaches, restaurants and travel can drive up standards and performance as well as attract more tourism. It can also be applied to industry training levels and links to assessing growth in productivity.

4. Investment: Investment levels in the tourism industry covers a wide range of market segments including accommodation of all types and sizes, leisure attractions and facilities, skills and training, transport and tour operations. Some important investment is small scale and local while others can be large multinational investment projects with complex financial structures. Finding indicators that pick up on the investment by the public and private sector and measurement of countries and segments where there are changes in investment trends and patterns are all important in understanding competitiveness and the relative movement in country performance. The drivers and enablers of competitiveness are all affected by investment levels.

5. Skills: Factors within skills, training, employment, managerial development and leadership considerations are vital for tourism competitiveness. Issues such as the high seasonality of employment, share of casual, short-term and fixed-term employment, wage levels and issues around security of employment all make the development of a single indicator very difficult.

5. Digital Capability: Tourism information and decision making is increasingly influenced by on-line sources and on-line trading, business to business and business to consumer communications and marketing. Digital connectivity is essential for all countries to reach potential and existing tourists and also affects the ability of businesses in the sector to build and develop their firms to improve competitiveness and generate greater economic and social benefits. Fast and reliable digital connectivity is one tool to enable business expansion, encourage investment and to reach potential markets and opinion formers; countries with comprehensive super-fast broadband connections have a competitive advantage which is becoming more important as social media and internet access takes a prominent role for promoters as well as in generating tourist awareness, branding, influencing decision making and purchases.