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THE ROLE OF CLUSTERS IN THE FORMATION PROCESS OF TOURISM SECTOR COMPETITIVENESS: CONCEPTUAL NOVELTIES Asta Malakauskaite1,Valentinas Navickas2 1

Kaunas University of Technology, Lithuania, [email protected] 2 Kaunas University of Technology, Lithuania, [email protected]

Abstract Clusters and their influence on the competitiveness of tourism sector have been analyzed in this study. Competitiveness of tourism sector can be described as the result of synergy between natural and humancreated factors of tourist destination appeal. First of all, it is determined by the ability of tourism companies to attract new visitors and increase their spending through the formation of quality goods and services, as well as valuable experiences. The aim of this scientific study is to analyze the role of clusters in the formation process of tourism sector competitiveness. To achieve the aforementioned aim of the study the following objectives have been set: to analyze the preconditions and conditions for the revelation of tourist destination competitiveness; to identify the cluster-determined factors of tourism sector competitiveness; and to define the potential forms and development trends for the cluster influence on tourism sector competitiveness. The methods of research are: systematic, logical, and comparative analysis of scientific literature; and synthesis. The research carried out by the authors enables to draw the conclusion that tourism companies that belong to a cluster have a better access to complementary services; they also may cooperate with governmental and academic institutions that often provide help associated with stimulation of tourism sector growth. Moreover, local universities and colleges educate the potential tourism sector workforce and may mend their study programmes according to the needs of companies. Modern business processes and technologies propose the idea that the aforementioned cooperation relations could be transferred to the e-space and thus start the era of virtual tourism clusters. Keywords: tourism sector, tourist destination, competitiveness, tourism sector clusters, virtual tourism clusters.

Introduction Competitiveness of tourism sector can be described as the result of synergy between natural and human-created factors of tourist destination appeal. First of all, it is determined by the ability of tourism companies to attract new visitors and increase their spending through the formation of quality goods and services, as well as valuable experiences. The role of clusters as an important competitiveness factor in the formation process of tourism sector competitiveness, as well as different aspects of this phenomenon are the problem of various scientific researches (Porter, 1990, 2003; Poon, 1993; Bordas, 1994; Dwyer, Forsyth et al, 2000; Goeldner et al., 2000; Jackson, Murphy, 2002; Breda et al, 2004; Capone, 2004; Flowers, Easterling, 2006; Fereira, Estevão, 2009). Even though at first the concept of clusters was associated with industrial development and industrial partnerships (Porter, 1990; Gordon, McCann, 2000), later it has been transferred to service sectors (or tertiary sector), including tourism (Breda et al, 2004). The aim of the study is to analyze the role of clusters in the formation process of tourism sector competitiveness. The objectives of the study are: 1. To analyze the preconditions and conditions for the revelation of tourist destination competitiveness; 2. To identify the cluster-determined factors of tourism sector competitiveness; 3. To define the potential forms and development trends for the cluster influence on tourism sector competitiveness. The novelty of the study lies in the fact that the authors of the study have analyzed clusters from the retrospective and prospective point of view and, while investigating the forms and development tendencies of cluster influence on tourism sector competitiveness, have introduced the conception of a virtual tourism cluster. The methods of research are: systematic, logical, and comparative analysis of scientific literature; synthesis.

The preconditions and conditions for the revelation of tourist destination competitiveness Tourism as a form of economic activity is exceptionally relevant to regions that have none or very few alternative sources of competitiveness, for example, regions that barely have any natural resources, poorly

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urbanized regions, and other economically stagnating regions characterized by rather low industry potential. According to Rosenfeld (1997), Fereira and Estevão (2009), active development of tourism might (indirectly) increase natural and historical-cultural potential of tourist destinations by stimulating the maintenance and upkeep of various objects (natural landscapes, architectural buildings, artwork, etc.) that may be attractive to tourists. Various authors (Opperman, 1993; Sharpley, 2002 et al) emphasize that the development of tourism sector has a positive stimulating influence on the whole economy which revels itself through the creation of new jobs and companies. Tourism sector competitiveness – as well as competitiveness of any other economic sector – cannot be separated from sustainable and harmonious development of tourist destinations. The development of tourist destinations must be sustainable not only economically, but also in terms of social policy, technology, nature, ecology, and culture. The long-term orientation towards qualitative development of industry also adds to the improvement of a tourist destination image. These factors are not directly related to tourism; however, it is common that economically strong countries have a much better developed infrastructure and tourism service base. They also possess a more attractive tourism image than economically weak countries. Thus, the general economic development is closely related not only to the inner qualitative changes in a country but also to the level of international competition (Navickas, Malakauskaitė, 2009b). The relations between competitiveness, inner qualitative changes of companies, and environmental impact have been analyzed in numerous scientific works (Strandskov, 2006; Snieška, Drakšaitė, 2007; Navickas, Malakauskaitė, 2007; Gerasymchuk, Sakalosh, 2007; Rutkauskas, 2008; Banytė, Salickaitė, 2008; Snieška, Bruneckienė, 2009; Žostautiene, Daraškevičiūtė, 2009; Malakauskaitė, Navickas, 2010). It must be noted that price is still a very important determinant of tourist destination competitiveness (Dwyer, Forsyth et al, 2000), notwithstanding, a new approach has become widespread in the last few years – the competitiveness of a tourist destination depends on the combination of various determinants. Therefore, a geographical zone characterized by plenty of different competitiveness factors is known as a “competitive destination” in the economic literature (Pearce, 1997; Ritchie, Crouch, 2003). Although the term “competitive destination” is not synonymous with the term “clusterized destination”, it can be presumed that the growing importance of cluster-based approach to economy (and tourism) growth shall eventually result in cognation of the aforementioned terms: clusters will take up a very important place among the determinants of tourism sector competitiveness. MACRO-REGION

POTENTIAL CLUSTERS

COUNTRY REGION CITY/ TOWN POVINCE ATTRACTION OBJECT

COUNTRY

COUNTRY

COUNTRY

COUNTRY

COUNTRY

Figure 1. The Hierarchical Interaction of Tourist Destinations and Clusters Created by the authors, 2010

A tourism sector cluster can be generally described as a geographical concentration of tourism-related companies, coordinating institutions, and associated tourism organizations. Porter (1990) additionally points out specialized providers of goods and services, governmental institutions and universities. Capone (2004) contributes to this approach by adding competitors. On the whole, tourism clusters should be associated with tourism objects concentrated in a particular geographical area, which has the necessary infrastructure, grants 150

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the provision of quality goods and services, enables to carry out a common marketing policy and coordinate the activities of local companies. According to Novelli et al (2006), Fereira and Estevão (2009), the role of tourism clusters is to relate individual companies through the elements of added-value production chain and network relations in order to create a complex tourism product which would appeal to tourists and grant the competitive advantage. In a narrow sense tourism clusters can be identified as clusterized tourist destinations. For instance, Ritchie and Crouch (2003) name several types of tourist destinations (see Figure 1). • Macro-region, which contains several countries (for example, South Asia, Europe, Africa); • Country (for example, Spain, France, Thailand); • Province or other administrative unit (for example, Provence, Salta); • Specific region inside a country (for example, Flandria, Normandy, Wales); • City or town (for example, Paris, Istanbul, Palanga); • Unique attraction centre (for example, Yosemite National Park, Niagara Falls). A relatively small number of tourists are interested in macro-regions and countries – people are usually attracted by specific experiences in regions and cities, such as Andalusia (Spain), New York (USA), Algarve (Portugal), Cape Breton (Canada), Flemish towns that are famous for their artwork and cultural heritage, etc. (Brown, Geddes, 2007). It is a perfect niche for the formation of tourism clusters since the major precondition for their creation is the existence of tourist attraction centers and geographical nearness or related companies. Regional tourism clusters also stimulate national and international competition among cluster companies.

Factors and development trends for the cluster influence on tourism sector competitiveness The greatest part of cluster-related competitive advantages arises from the variety of partnership forms among organizations, business units, universities, governmental bodies, and associated institutions. It must be noted that clusters should be treated as systems, rather than a sum of constitutive companies (Navickas, Malakauskaitė, 2008, 2009a). Fereira and Estevão (2009) identify the position of clusters in tourism and related business with the help of theoretical model. The basic elements of this model are: tourism competitiveness factors, competition strategies inside and outside the cluster, influence of tourism sector on the development of regional (national) economy, controlled factors of tourist destination appeal, the role of governmental institutions and academic organization in the development of tourism clusters. According to the analysis carried out by Fereira and Estevão (2009), the principal structural model of a tourism sector cluster can be created. In this model a cluster is identified with clusterized tourist destination. This model enables to nominate the main competitiveness determinants of cluster companies (see Figure 2). The competitiveness of tourism clusters is determined by: • Existence of related and complementary businesses; • Accessibility of resources (workforce, materials, etc.); • Integrative business and marketing strategy; • Competitiveness level and market concentration ratio; • Synergy of all determinants. Efficient competition strategies inside and outside the cluster are based on: • Cooperation among companies; • Creation of entry barriers; • Creation of exit barriers; • Product differentiation and innovations. Positive influence of tourism on the development of regional (national) economy is determined by: • Appeal of natural, historical, and cultural resources; • High development level of leisure and entertainment industry; • Organization of events and festivals; • High quality of tourism infrastructure and complementary services (for example, commerce). Controlled factors of tourist destination appeal: • Tourism marketing; • Educational and promotional tourism information; • Entrepreneurship and business ventures; 151

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• •

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Supply of complimentary goods and services (guides, tourism information centers); Work quality of tourism and related companies’ personnel. TOURISM CLUSTER Competitors Governmental

Academic institutions

Tourism agencies and travel operators

Retail stores, souvenir shops, supermarkets, etc. Transport and communication companies

Hotels, hostels, B&B, selfcatering, etc. Tourist destination

Leisure and entertainment companies (museums, etc.)

Restaurants, bistros, cafes, bars, cafeterias, etc. Other tourism and related companies

TOURISM INFRASTRUCTION Recreation and health institutions

Associated organizations

Competitors

Competitors

Figure 2. The pincipal model or a tourism sector cluster (clusterized tourist destination) Created by the authors, 2010

Governmental institutions stimulate the development of tourism clusters through: • Creation of physical infrastructure and introduction of complementary services; • Creation of accessibility to tourist destination resources; • Provision of financial aid to investment projects of tourism companies; • Improvement of security in a tourist destination; • Preservation of natural, historical, and cultural resources of a tourist destination. Academic institutions stimulate the development of tourism clusters through: • Education of human resources; • Development of tourism innovations; • Participation in the creation of tourism products diversification strategies. Modern business processes and technologies propose the idea that interorganizational relations could be transferred to the e-space and thus start the era of virtual tourism clusters (Hoffman, 2007). These clusters

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open up new cooperation and integration possibilities for small and medium companies that are innovative and ingenious, and hereby can maximize the results of the whole group. The concept of virtual cluster was introduced by Galbraith (2000), while describing global companies such as eBay. According to Galbraith (2000), eBay is a small specialized cluster which achieves the economy of scale and specialization through the use of network structures that ensure speed, innovation and flexibility characteristic of small companies that virtually represent eBay. In other words, eBay is a good example of a virtual cluster when geographically large network is controlled through the Internet and therefore grants the delivery of goods 24/7. The recent trends enable to make a conclusion that a virtual cluster may be formed in almost any sector including tourism sector. A virtual tourism cluster would integrate tourism companies of various sizes into the virtual tourism network. The use of a virtual, self-updating information system would greatly increase the competitiveness of tourism companies engaged in the network. For example, a commonly accessible virtual reservation system would help cluster companies forecast the flows of tourists and thus plan their occupation level, change marketing tools and make strategic decisions. The use of virtual communication or cooperation tools would increase the speed, dynamics, flexibility, and adaptability of business operations and thus enable tourism companies to increase their competitive advantage with regard to non-clusterized tourism companies or companies that operate in the structure of a traditional tourism cluster.

Conclusions 1. Even though price is still a very important determinant of tourist destination competitiveness, a new approach has become widespread in the last few years – the competitiveness of a tourist destination depends on the combination of various factors. Competitiveness cannot be separated from sustainable and harmonious development of tourist destinations. The development of tourist destinations must be sustainable not only economically, but also in terms of social policy, technology, nature, ecology, and culture. Although the term “competitive destination” is not synonymous with the term “clusterized destination”, it can be presumed that the growing importance of cluster-based approach to economy (and tourism) growth shall eventually result in cognation of the aforementioned terms: clusters will take up a very important place among the determinants of tourism sector competitiveness. 2. A tourism sector cluster can be described as a geographical concentration of tourism-related companies, coordinating institutions, associated tourism organizations, and specialized providers of complimentary services. A tourism cluster might embrace city, region, province, country or even a group of countries (macro-region). The competitiveness of cluster companies is determined by the accessibility of goods and services, specialized resources, assistance from tourism organizations or governmental institutions (for instance, tourism information centres may contribute to the spread of information about museums, theatres, restaurants, etc.). 3. Modern business processes and technologies propose the idea that interorganizational relations could be transferred to the e-space and thus start the era of virtual tourism clusters. A virtual tourism cluster would integrate tourism companies of various sizes into the virtual tourism network. The use of virtual communication or cooperation tools would increase the speed, dynamics, flexibility, and adaptability of business operations and thus enable tourism companies to increase their competitive advantage with regard to non-clusterized tourism companies or companies that operate in the structure of a traditional tourism cluster.

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