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Can the tourist-area life cycle be made operational?
Can the tourist-area life cycle be made operational? K. Michael Hay-wood The tourist-area life-cycle concept has become accepted in the minds of tourism planners and managers. If the lifecycle concept is to be useful it must be made operational. This paper reviews six major conceptual and measurement decisions necessary to accomplish this task. The applicability of the life cycle to tourism forecasting and marketing strategy is then considered. The article concludes with some thoughts on how tourism planning might be better served if the concept of evolution of a tourist area were based more on a framework of structured analysis and the Darwinian natural selection theory than the life-cycle concept. Keywords: tourtst tounsm planning
area; life-cycle concept;
K. Michael Haywood IS Associate Professor at the School of Hotel and Food AdmInistratIon, University of Guelph, Guelph. Ontario. Canada. ‘John E. Rosenow and Gerreld L. Pulslpher. Tourism: The Good, the Bad, and the Ugly, Century Three Press, Lincoln, Nebraska. 1979. LOUIS Turner and John Ash, The Golden Hordes, Constable, London, 1975; and G. Young, Tourism, Blessfng or Bl/ghf7 Penguin. Harmondsworth, 1973. ‘R.W. Butler, ‘The concept of a tourist area cycle of evolution. Implications for management of resources’, Canadian Geographer, Vol 24. 1980, pp 512: W. Chnstaller. ‘Some conslderatlons of tourism location in Europe: the penpheral regions-underdeveloped countnesrecreation areas’, Papers of the Regional Scrence Assocralron. Vol 12. 7963, pp 95-105; and C. Stansheld, ‘Atlantic City and the resort cycle. Anna/s of Tourism Research, Vol 5. No 2. 1978, pp 238-251. 3lbid, Butler. %V Hovlnen, ‘A tourist cycle In Lancaster County. PennsylvanIa’. Canadian continued on page 155
154
Considerable attention has been given in the tourism literature belief that tourist areas not only change over time but change worse : 0 0
l l
to the for the
pristine beauty becomes soiled with tacky development; highbrow tourists are replaced by the lowbrow: residents initially enamoured with the industry become disenchanted; and eventually tourism with all its inherent promises self-destructs. ’
Conceptualizers of this inevitable change characterize tourist tireas as passing through life stages that progress from birth to death.? Represented by the S-shaped logistic curve. which has its basis and acceptance in biological studies. Butler has suggested that the life cycle is comprised of the following stages--an exploration stage. an involvement stage, ;I development stage. ;I consolidation stage, a stagnation stage :rnd either ;I decline stilge or rejuvenation stage.” Figure 1 illustrates this typical cycle. Currently the life-cycle concept seems to be enjoying ;I high degree of acceptance. Researchers such x Hovinen and Mayer-Arendt have employed the concept to explain the rise irnd fall of ;i variety of tourist destinations.’ The overall simplicity of the concept and its life-to-death analogy have also helped re-orientate thinking about tourist areas by suggesting new rclationhhips that otherwise may not have been obvious. For example. Cohen’s classification of tourists suggests that a destination will be initi:llly visited by ;I few ‘drifters’ and ‘explorers’ followed by large numbers of ‘individual mass tourists’ and ‘organized mass tourists’.’ As such the tourist-:uea life cycle serves as a descriptive model of the st:tges of market acceptance. and represents the ‘supply’ view of the diffusion model. However, the true test of the importance of the life cycle must he based on its possible use x a tool for the planning and management of tourist areas. As Butler emphasizes: Tourist
attractions
ah finite carefully kept
and
protected
within
maintained
xc
not infinite
pos>ihly
and timeless
non-rencwahle
and preserved.
predetermined
but should
resources.
The development
capacity
limits.
They
be viewed could
and treated
then
be more
of the tourist area could be
and its potential
competitiveness
over ;I longer period.”
If the tourist-area
life cycle is to be used as ;I management
0261~5177/861030154-14$03.00
@) 1986 Butterworth
or planning
& Co (Publishers)
Ltd
Can the rourisr-area life cycle he made operarional:’
ConsoJidatlon
-a-_
elements of capauty
Number tourists
Explomtion
Figure 1. Stages in the tourist life cycle. Source: Butler, CJ~tit, Ref 2.
area
tool, however, it must first be made operational. In other words. is it possible to determine or predict unambiguously the exact position or stage of a tourist area? Does knowledge of the life-cycle stage help in determining specific management actions? In an attempt to answer these questions this paper examines six major conceptual and measurement decisions necessary for making the tourist-area life cycle operational. The use of a life cycle as a model for tourism forecasting and a guideline for marketing strategy is then considered. The paper concludes with some thoughts on the evolution of tourist areas as related to the need for tourism planning. development. and marketing.
Concept and measurement Six operational
decisions
In order to make the tourist-area life cycle operational six major conceptual and measurement decisions need to be considered: unit of analysis; l relevant market; l l pattern and stages of the tourist area of life cycle; identification of the area’s shape in the life cycle; l 0 determination of the unit of measurement; and l determination of the relevant time unit. (I)
continued
from page 154
Geographer, Vol
25, No 3, 1981, pp 283-286; and K. Meyer-Arendt, ‘The Grand Isle, Louisiana Resort Cycle’, Anna/s of Tourism Research, Vol 12, 1985, pp 449-465. ‘E. Cohen, ‘Towards a sociology of international tourism’, Social Research, Vol 39, 1972, pp 164-182. ‘Butler, op cif, Ref 2. ‘R. Polli and V. Cook, ‘Validity of the product life cycle’, The Journal of Business, Vol 42, October 1969, p 390.
TOURISM
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Unit of analysis
What is the definition of a tourist area and how can it be clearly delineated? Should the tourist-area life cycle be undertaken for a specific region, a city or town, a designated area within the city or town, hotels or other specific tourist facilities? It is surprising that little attention in the tourism literature has been given to the identification of the most appropriate unit or units of analysis. In an attempt to validate the product life-cycle model in marketing, Polli and Cook concluded that the fit of the life-cycle model depends heavily on the definition of the product used and the relevancy of product class partitioning.’ For example, if the life cycle of hotels within a region is considered should the focus be on all types of lodging establishments? On motels? On hotels according to size, rate structure or location? Should campsites or hostels be included? Extend the life cycle to an entire resort area and
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Can the tourist-area
life cycle
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questions arise as to boundaries and the types of businesses. facilities and tourist activities that should be included. Defining and delineating the unit of analysis for a resort area is the first and most crucial step in attempting to make the life cycle operational. While a life-cycle analysis could possibly be undertaken at any level. relationships among the life cycles of these various levels should also be considered. While no a priori rule can be established as to the “correct” unit of analysis. selection of the unit(s) of analysis should be based on need and intended use of the information.
Most applications of the tourist-area life cycle assume implicitly that the tourist market is homogeneous and composed primarily of one segment with distinct subsegments that differ from each other only in their “degree of innovativeness” or. as Cohen describes, their “degree of institutionalization”.’ These traditional approaches ignore the possibility of sequential entry into distinctly different market segments. each of which can be further segmented according to tourists’ degree of innovativeness or other relevant tourist characteristics. Such sequential entry to various market segments may result in the type of tourist-area life cycle presented in Figure 7. For example, segment one may represent a ‘jet set’ of tourists; segment two a convention or meetings market; and segment three an inclusive tour market. While most tourist-area life cycle studies have focused on visitation at the total market level, there arc occasions in which it may be appropriate and important to consider the resort-area life cycle by market type (cg domestic versus international tourists), distribution method (eg travel agent versus independent booking) or market segment (eg family versus corporate group).
‘Cohen, op ot. Ref 5 ‘R. Pearl, Sfud/es m Human Puology, Wilkins and Wllklns. Baltimore, 1925.
Figure
2. Tourist
sequential ments.
156
entry
area
life cycle
with
to three
market
seg-
function.
applied situations
the S-shaped logistic This function was first popularized by Pearl and has been to a variety of biological phenomena and other growth such as the spread of epidemics and rumours.”
Time
TOURISM
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Can the tour&-area
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This tourist-area life cycle, although suggested by conceptual analogies from biological life cycles and the theory and findings concerning the diffusion and adoption of innovations is only one of many possible empirical patterns.‘O Even Butler suggests that the “exploration” and “involvement” stages may be of minor significance for an instant resort such as Cancun, Mexico.” Hovinen indicates that “Lancaster County (Pennsylvania) shows significant departures from Butler’s postulated ‘consolidation’ and ‘stagnation’ stages as well as from the ‘exploration’, shape of his postulated curve of growth of numbers of tourists through Clearly there are a variety of possible tourist-area cycle-oftime”.” evolution curves such as those presented in Figure 3. The existence of a variety of non-S-shaped curve patterns implies that there are other than the traditional stages to the tourist-area life cycle. In fact, even those who accept the S-shaped curve as the dominant pattern of the tourist-area cycle-of-evolution identify a varying number of stages and labels for these stages. For example, Noranha identifies three stages:
l l “E.M. Rogers, ‘New product adoption and diffusion’, Journal of Consumer Research, Vol 2, March 1976, pp 290-330. “Butler, op tit, Ref 5. “Hovinen, op cit. Ref 4. ‘%. Noranha, Review of the Sociological Literature in Tourism, World Bank, New York, 1976.
0
discovery; local response institutionalized
and initiative; and “institutionalization”.”
(4) Identifying tourist area’s stage in the life cycle Two key questions life-cycle concept: 0
face
how to determine
I
Nurdu
twists
of
those
who
attempt
the stage of a tourist
I
to use the
area;
tourist-area
and
A well - nwnaged and sofe urban centre thot enjoys 0 variety of tourist attractions ond antirues to attract of visitors
I
o consistent
number
Time
*N~Wro‘t tourists
An instant resort complex such OS Concud, Mexico (Butler, 1980 1 thot hos strong drowing power
7 I/
Y
Time
A
regional oreo that peaks ond falls
in terms
of
Numter
visitations. Tim fall is due to o “scae’ ond on increase in costs of gosdine - Lancaster County, Pennsylvania ( Hovinen , 1981)
of
tourists
Time 4
Number twists
Figure 3. Alternate cycle patterns.
TOURISM
tourist area
MANAGEMENT
of
life
I/s
An urban resort such OS Atlantic City a new major ottroction - gotrUing (Stonsfield , 1978 1
thot odds
Time
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0
how to determine another.
when
a tourist
area
moves
from one stage
to
Given that time-series data rarely obey the theoretical pattern of a smooth curve. and that the S-shaped curve is only one of a number of possible life-cycle patterns. it is not at all clear whether a tourist area’s position in its cycle and its shift from one stage to another can be identified simply by observing the historical pattern of the number of tourists. A possible operational approach to the identification of a tourist area’s position can be based on the possible change in the number of tourists from one year to the next. These changes can be plotted as a normal distribution with zero mean. If a tourist area has a percentage it could be classified in the decline stage. change of less than -0.50 Tourist arcas with percentage changes greater than 0.5% can be classified as being in the development stage and tourist areas in the range of +O.Sa could be considered to be in the consolidation and stagnation stages. The theoretical distribution and the corresponding stages are presented in Figure -1. Identifying the length of time of each stage and the exact point at which the
a tourist
area shifts
use of the
rates, market tourist arc;1s.
from
tourist-area
one stage to another
life-cycle
accessibility
is closely
related
to
concept
for forecasting visitation :md actions of competitive
and acceptance.
While the tourist-area life-cycle is baaed on the size of the tourist population, there :lrc still ;I number of unresolved issues. The first revolves around the issue of carrying capacity or saturation level. As Hovincn says: Butler’s hypothesized ;IT~;I's
carrying
;~ttr;ictivenes\ therefore exe
for
stage
hecome
vihitorx.
importanl
illustrate\
‘decline‘
capacity
if hi\
A
method
argument
the potenti:rl
ret\
on the
esceed~d
and
assumption that
that area
g an area‘s
of definin
ih to he accepted,
difficultic~.
the
A \ingle
hut
elements
loses
some
carrying
capacity
its k
Lancaster County
the
carrying
of an of
capxity
thwshold
Cansdtdation stage
Frequency
Percentage
Figure 4. Identifying cycle
158
stages.
tourist
area
life-
Source : Bcsed Jwnw~
on Polli md d
Bus/ness,
change m the number of tourists
Cook’s “Volidlty Volume 42,
TOURISM
of the Product
Life Cycle”
1969
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Can rhe rourisr-area life cycle he made operational?
clearly does not exist: instead the area’s capacity consists of different cultural and natural elements which vary both spatially within the county and temporally throughout the year.lJ Furthermore, as Hovinen emphasizes, carrying capacity may be more a perceptual issue.‘” Residents may believe that the number of tourists may be exceeded before the end of the development stage whereas some visitors and business people may believe that the carrying capacity may far exceed the numbers of tourists reached during either a consolidation or a stagnation stage. This suggests that if the use of the number of tourists is to be used as a measure. consideration should be given to such ameliorating variables as: 0 0 0 0
the length of stay; dispersion of tourists within and throughout characteristics of the tourist; and the time of year in which the visit is made.
the tourist
area;
The second issue concerns the appropriateness of using a touristexpenditure model instead of tourist population to determine the shape, pattern and stage of the life cycle. If such a measure were used a subsequent question would be whether this expenditure should measure unit sales (eg number of visits to a park or a museum) or dollar values. Then. of course, there is the question as to whether the analysis of this expenditure should be based on actual expenditure or adjusted should they be adjusted to per capita expenditure. For example, expenditure? Corrected for seasonal or cyclical periods? Adjusted for general economic conditions (current versus real prices), etc. Measurement could go beyond the typical visitation and expenditure measures and include such measures as market-share figures or profitability. A decline in tourist volume or tourist expenditure is not necessarily an indication that a tourist area has entered a stagnation or decline stage. Tourist volume may be down throughout a region or county and yet a given tourist area’s share may be unchanged or even improved. A measure of profitability. while difficult to obtain. may be quite appropriate. Traditionally individual businesses that reach maturity or find themselves in a stagnation stage tend to experience a serious decline in profitability. even before reaching this stage. It is very difficult for a company or even I tourist area to rejuvenate unless the necessary resources, particularly financial resources are available. The inevitability of the decline stage is in large part due to a lack of resources and resourcefulness. (6) Determirlirlg the relewnt
“.Hovrnen, op tit, Ref 4. 15/bid.
TOURISM
MANAGEMENT
time unit
Most tourist-area cycles arc based on annual data. Yet it is not clear why the analysis should be limited to this unit of time. In many instances, it may be appropriate to develop a tourist-area cycle based on quarterly or monthly data. Given that the shorter the time period the higher the likelihood of seasonal and other fluctuations, it may be appropriate to use some form of moving averajie. However, this in no way denies the need for more longitudinal data. If the tourist-area cycle-of-evolution has a major shortcoming it is the lack of empirical data over the long term.
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Can the tourisr-area life cycle he made operarional?
Tourist-area
life cycle as forecasting model
A natural use of the tourist-area life cycle is the prediction of the visitation and/or expenditure rate. Assuming the general S-shaped pattern, with information on visitation and/or expenditure for the first few periods and a simple predictive model, the visitation and expenditure rates in subsequent periods can be predicted. Considerable effort has been devoted to the development of product life-cycle-based forecasting models in the marketing literature and many of these have applicability to tourism. The two basic models of Brady and Adams, and Fourt and Woodlock. as well as similar diffusion models can generally be described in terms of four distinguishing features: 0
0 0 0
A ceiling that reflects in most cases, the researcher’s belief as to the expected saturation level. Most of the models assume a constant saturation level, although they can be modified to incorporate a somewhat more realistic situation in which the level of saturation changes (at a decreasing rate) over time. An S-shaped diffusion curve. In a few cases, an exponential growth curve is proposed. An assumption of homogeneity of customers. No explicit conclusion of marketing strategy or the action of competitors. If’
The ceiling/saturation assumption can be tested empirically. and evidence in the marketing and recreational geography literature suggests that it is a reasonable assumption, especially when viewed not as a constant, but as a function of various corporate, competitive and environmental forces. The specific level of saturation or carrying capacity for a tourism area would have to be based on all relevant information about similar tourist areas and an assessment of the potential impact of the area’s and competitive areas’ actions on the market place, given alternative environmental scenarios. Furthermore, in any forecasting model utilizing a saturation level. it might be useful to conduct sensitivity analyses to determine how sensitive the solution is to different assumptions concerning the saturation level. With regard to the shape of the diffusion function evidence seems to indicate that the S-shaped curve is only one of many possible functions. Again utilization of visitation and/or expenditure data for related and similar tourist areas, and sensitivity analyses are essential in the development of any model. Imitatiotl
‘6D. Brady and F.G. Adams, The Diffusion of New Products and their impact on Consumer Expenditures, Economics Research Unit, University of Pennsylvania. Philadelphia, 1962; and L.A. Fouri and J.W. Woodlock, ‘Early prediction of market success for new arocerv nroducls’. Journal of Marketing, Vol 25, *&tober 1.960, pp 31-36.
17Bass, 1969. ‘*Cohen,
160
op tit, Ref 5.
One of the major developments in predicting the life cycle of consumer products has been the recognition that consumers are heterogeneous. Bass. for example. segmented the purchasing population into innovatars, who buy the product because they like it, and imitators, whose decision to buy is in’fluenced by the number of people who have already bought the product.” The same could be true for tourist areas. The number of visits and amount of expenditure would be a function of the relationship between the two populations, (or as Cohen suggests a relationship between individual travellers and institutionalized Ix The higher the imitation or institutionalized coefficient, the tourists).
TOURISM
MANAGEMENT
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1986
Can the tourisr-area life cycle be made operarional?
higher the peak number of tourists, but as suggested by Polli and Cook in their study of consumer products, this could also result in a drop in tourist expenditure as the innovators or ‘jet set’ tourists move on to new or more exclusive destinations and as prices fall.‘” Experience
Another approach to dealing with tourist heterogeneity is the suggestion that the probability of visiting may depend on a person’s travel experience and prior visits to the destination or a similar destination. In other words, experience determines a tourist’s visitation priority pattern. In some cases this may result in regular return visits particularly among those who have a vested interest in the destination (home of ownership of a cottage. condominium or friends and relatives, timeshare unit). The priority to return may be quite low, particularly if the destination were unappealing, thoroughly explored during the first visit, or if there is a desire to continue to seek out more new and novel destinations. Forecasting
Most tourist diffusion models tend to examine the relationship between time and visitation and/or expenditure. ignoring one of the most central concepts-that of the conditional forecasting. That is, given that visitation and expenditure are a function of the tourist area’s marketing strategy, the forecasting should reflect alternative strategies resulting in a series of forecasting curves. More sophisticated approaches to forecasting could take into account not only the tourist area’s marketing strategy, but also the actions and reactions of competing tourist areas. How good are tourist visitation and expenditure forecasts of tourist-area life-cycle models? It seems that most models are concerned with, and able to predict, the development stage; and poor at predicting the stagnation and decline stage. However, tourist forecasters may want to examine Cooke and Edmondson’s 1973 LIFER (life cycle forecaster) model.20 Another approach has been suggested by Wilson who focused on the discovery of leading indicators of the timing of the stagnation may be: stage. 21 Suggested indicators for tourism forecasters “Ft. Polli and V. Cook, ‘Product life cycle models: a review paper’, MS/ Working Paper, No P-43-2. November 1967. *“E. Cooke and B. Edmondson, ‘Computer aided product life cycle forecasts for new product investment decisions’, rn Increasing Marketing Productivity and Conceptual and Methodological Foundations of Marketing, T. Green, ed, American Marketing Association, Chicago, 1973, pp 373 377. “A. Wilson, ‘Industrial marketing research in Britarn’, Journal of Marketinq Research. Vol 6, February, 1969, pp 15->8. *“R.D. Buzzell. ‘Comoetetive behaviour and product life cycle’.‘AMA Proceedings, American Marketing Association, Chicago, 1966, pp 46-68; T. Levitt, ‘Exploit the PLC’, Harvard Business Review, Vol 43, November-December 1965, pp 81-94; and J.E. Smallwood. ‘The product life cycle: a key to strategic marketing planning’, MSU Business Topics, Winter 1973, ~~‘29-35.
TOURISM
MANAGEMENT
0 0 0 0 0 0
l
a declining proportion of first-time visitors versus return visitors; declining profits of major tourist businesses; tourism industry overcapacity; appearance of new and accessible destinations; decline in elasticity of advertising coupled with increased price elasticity; present visitors’ length of stay; and style and period-of-life changes among prospective market segments.
Guideline for marketing strategy At present the management of a tourist area, from both a macro and a micro point of view, tends to be focused almost entirely on marketing. Not surprisingly there is a wealth of information on strategic marketing actions that could be applied to each stage of the tourist-area cycle.‘2 Recommendations have frequently been made concerning the type and level of advertising, pricing, distribution and other product/marketing
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required for each stage. However, these attempts to prescribe a marketing strategy and guide the allocation of marketing resources over the stages of the cycle are to a large extent unsupported by empirical evidence. For a tourist area it would be erroneous to assume that the dominant determinant of a marketing strategy is the stage of the life cycle. while the differences among tourist areas and markets are ignored. Furthermore, it is implicit in such an assumption that. at any one stage of the cycle. a tourist arca has only a single ‘reasonable’ marketing strategy to follow. This implicit assumption is not only misleading but also dangerous, since it can constrain creativity in generating new marketing strategies. The correct question, therefore. is not what specific strategy the tourist area should follow at each stage of the cycle. but. rather. how area’s stages in the cycle can be utilized in input of the tourist generating, developing and evaluating better marketing strategies. that the tourist-area life cycle Accepting this view suggests, therefore. can be utilized in two ways-namely life extension and incorporation of other inputs. activities
This strategy is based on the follow the life cycle (regardless height or shape of the curve). ‘market stretching’ is based on When very the
;I company outset
dwelops
basic premise that all tourist arcas do of the time dimension involved, or the According to Levitt ‘life extension’ or the important proposition that:
a new product
a series of actions
or service.
to be employed.
it should
at various
try to plan at the
subsequent
product’s existence so that its sales and profit curves are constantly
rather
than following
their
usual
declining
stage\
in
sustained
>lope.”
It might be difficult to follow Levitt’s advice and plan for all subsequent tourist area cycle extensions at the outset, yet the direction he suggests is most valuable. The four possible strategies he suggests arc as follows.
(I) Pronwting mow Jj.cytrcrit list nniotig crlrwtit l4ser.Y(tolrrists). Tourist areas could try to get visitors to increase their length of stay; attempt to encourage repeat visitation; provide more and better information/ signage to ensure visitors actually move throughout the tourist area in order that they may actually see and experience more of what the area has to offer. (2) Lkvdopitig tmm 1’uricd icr ot?lotlg currctit mv3 (toitrists). Most tourist areas enjoy a diversity and richness of resources that allow a visitor to enjoy ;I variety of experiences-social. cultural and physical. Too often a tourist area has developed a singular or popular image that may serve to initially attract the visitor: however, once attracted the visitor should bc made aware of other satisfying opportunities and pursuits.
(3) Creating rlcw~ U,SPS.Whether a tourist area decides to expand into centre as in gambling as in Atlantic City. NJ. or build a convention Toronto, Ontario, it is attempting to justify its continued existcncc as a tourist area, utilize existing resources. or renew or replace existing and outdated facilities. Such attempts to attract new markets, if carefully 23/hid, Levitt.
162
planned,
need
flagging
industry
not be viewed (as some
as desperate
tourism
TOURISM
last-ditch
researchers
would
MANAGEMENT
efforts have
to resurrect
a
one believe).
September
1986
Can rhe tourisr-arealife cycle be ma& (4)
Finding
new users (tourists)
by expanding
operurronal?
the market.
Diversification into such businesses as gambling and conventions is one way of attracting tourists who may not otherwise visit the area. By justifying the existence of the tourist area and overcoming such obstacles as a lack of information or interest, money or motivation. new visitors could be attracted. These strategies and examples suggest some of the ways a tourist region or destination can extend its life cycle. At a more general level, however. Levitt’s four suggested strategies can be viewed as a subject of a broader array of strategies available for tourism management. Figure 5 suggests a more general framework for such life-extension strategies. These are based on combinations of four major dimensions: 0
l 0
0
the distinction between an existing tourist destination and new facilities or activities within that destination; the distinction between attracting existing tourist market segments and new segments; the distinction between visitation of a tourist area based upon a given positioning strategy versus its promotion using a new or additional positioning strategy to improve its competitiveness with other tourist areas: and the distinction between increasing the frequency of visitation and the length of stay and expenditure levels and patterns.
It is important to note that these four dimensions can result in 14 possible combinations and that none of these strategies (or the four Levitt strategies) suggests specific product, price, promotion or distribution strategies, as do the strategies proposed by product-life-cycle writers such as Smallwood.‘” Incorporation 241b/d;and Smallwood, op c/t, Ret 22.
The
second
of other inputs
approach
to overcoming
some
Present tourist segments
Present postioning
Existing facilities activities in tourist region
of the limitations
market
l%tentiol positioning
of the
F’atentlol tourist morket segments
lmtiol positioning
Subsequent positlonmq
Frequency of vwtaticn Length of stay expenditure levels and potterns
;
Frequency of wsltohon Additions to tovist regions Product
Figure 5. A framework for tourist aiea life extension strategies.
TOURISM
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Lenpth of stay, expaditure levels and patterns
163
tourist-area life-cycle concept involves incorporating information on a tourist area’s position in its life cycle with information on market share or market share and profitability. In comparison to marketers and planners of consumer products who incorporate this information as ;I matter of course, tourism planners and marketers will find it more difficult. However. the product portfolio models offer ;I set of dimensions on which a tourist area could be analysed (market share as a measure of strength, growth as a measure of attraction. as well as other dimensions such as profitability, expected return and risk). A review of Catry and Chevaliar, and Wind and Claycamp will reveal a comprchensive approach as to how marketers identify a product’s position on its relevant performance dimensions.‘5 Since most life-cycle models propose a parallel profit curve (low at introductory stages, rising until a stage in the growth phase Lvhere profits level off and start declining) tourism planners could attempt to do the same in their life-cycle models. One good reason for doing so is that development, marketing and operational costs. not to mention allocated other economic and social costs. need to be properly throughout the life cycle. Most tourist business practitioners recognize the fact that the nature and number of competitive firms and destinations is increasing rapidly. It would be beneficial, therefore. to examine explicitly the competitive environment and the changes over time. Market share can be used to measure the changing competitive structure of the tourism market and should be supplemented by an analysis of direct and indirect compctition and the identifiable competitive actions (such as price cutting, increased promotion. addition of new facilities and activities) at various stages of the competitive cycle.
Evolution To~rrism
of tourist areas
plattttitt~
rrttri
tttuttqctttettt
Evolution of tourism areas is of critical importance for tourism planners and managers. The evolution process has ;I positive or negative effect not only on the basic attractiveness of the area and its tourism resources. but on the people who live and work in the community, on the visitors who come into the arca. and on the tourism industry as a continued investment opportunity. Consequently, it is often necessary to make adjustments to ensure that the industry serves the needs of all groups and publics.“‘ Understanding the process of tourist area evolution and because the cost of being able to predict change arc also important as the need for change becomes more reacting usunllv incrcascs obvious. Moreover. the benefit from tourist-area planning is the highest for
the tourist The
area that
starting
point
utilizes
for
it.
analysing
tourist-area
evolution
should
be
:I
framework
‘“Catry and Chevallar, 1974; and Wind and Claycamp, 1976. 26K.M. Haywood, ‘Criteria for evaluating the social performance of tourism development projects’, Tourism as a Facfor on National and Regronal Development, Department of Geography, Trent University, Peterborough. pp 74-79.
of structured analysis. The reason for this is that tourism like any industry is deeply rooted in an underlying economic and political structure whch is comprised of seven major economic and social forces. These are shown in Figure 6. The coll&tive strength of these forces determines
the
ultimate
SLICCC'SS
of
any
tourist
area.
and
hence
its
evolution. (1) tion
Riwiry for
uttwttg
the prized
existittg
tourist
possession
ureas.
and scarcest
TOURISM
Tourist
areas
resource
MANAGEMENT
are in competi-
of all-the
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tourist.
1986
Can rhe tourist-area
life cycle he made operational?
concerned publics who oppose or are threatened by towsm and tourism
firms, taJr opemtors, travel intermediaries, OaMnmodation and suppliers -
Figure 6. Structural
forces
driving
tourist area evolution.
This is accomplished by competing for top-of-mind-awareness among selected market segments. This jockeying for position requires use of advertising and creation of images (eg “It is better in the Bahamas”), pricing (eg Westours, Alaska vacation “Seal the deal before December 31st and save $300”), new attractions (eg Toronto’s CN Tower), and promises of increased service and hospitality (eg Helmsley Hotel “1 won’t be treated like another room number, why should you”). (2) Developers and developmc~nt of ?lew tourist ureus. New entrants to the tourism industry introduce new and novel attractions and amenities. Coupled with sufficient marketing clout to attract visitors, visitation rates and profitability in existing tourist areas could suffer. (3) Substitutes for the tolrrismltrrrv~~l experience. The tourism industry competes in a broad sense. within the leisure industry. For example, people can opt to travel vicariously at home by using their VCR and renting movies; or, they can install their own swimming pool in their backyard. Products or services that provide virtually the same function as travel and are perceived as having a better price/value relationship are candidates for substitution. and concerned publics who oppose tourism or Tourism is a phenomenon that takes place, is produced or is performed within people’s communities or home surroundings. Moreover. tourism utilizes resources which many people deem scarce, fragile and precious. Consequently, there exists a desire to protect and save these resources either from developers who might greedily and uncaringly exploit them, or from visitors who may not fully appreciate their symbolism and importance. These protectionist forces (4) Envirorlmentulists
tourism
TOURISM
MANAGEMENT
September
1986
developmenf.
165
curtail development and change; or. at the very least, encourage aesthetic sensibilities of developers and visitors.
can
(5) Transportabon companies, tour accommodation und suppliers-heir
the
operarors, rruvel inrermediarie.s, hrrrguining power. The tourism
industry consists of a wide variety of interrelated and interdependent businesses that facilitate and direct visitors to specific destinations. These businesses can either increase or decrease the cost of travel to and within particular tourist areas. Some of these intermediaries are large companies with considerable bargaining power. As a result they can either encourage or discourage travel to a particular area: and they can squeeze profitability out of an industry. eg tour operators bargain with hotels for reduced room rates by trading off large blocks of guaranteed room-nights. (6) Touri.st.s-their tweeds, Mwnfs. perwpfions, expecmfi0n.s (itld price sensirivi~y. The travelling public is large. diverse and demanding. No tourist area can compete successfully without carefully considering who its visitors arc or who it wants its visitors to be. Whatever the situation a tourist area must offer and be able to deliver a ‘tourist experience’ that is unique and intensely satisfying. Experiences that are second rate quickly result in ;I declining tourist hasc. (7) (;o~~crntnetlrrrl, politicrrl rend reglrlrrtor~ bodies Nnd forces. Depcnding on economic and social priorities. governments have a profound impact on the success of the industry. Policies and regulations with regard to taxation, education, immigration and customs, transport, marketing. culture. environment, development. financial assistance, and industry - government cooperation can either assist industry growth and development or strangle it. Di.scirs.sioti
Any
significant
considerable
change
impact
in these
on a tourist
seven area.
For
underlying this reason,
forces will have it can bc argued
viewed, ie 2s ;I the tourist-area life-cycle model, as it is currently biological life cycle, provides insufficient insight into the development of policy and planning for tourism areas. It does nor consider how the tourist area or competing arcas can affect the shape of the curve; and if the life cycle is taken as given. the result may be an undesirable self-fulfilling prophecy. Some may even question whether the life cycle has provided much more than the acceptance of the premise that all tourist areas e\,entually decline. Tourism forecasting models also owe little to the life sciences: the major developments in these models have occurred within marketing. management science, and econometrics or by those who have been concerned with conditional forecasting. Given the questionable benefit of the life-cycle model, one may ask whether there are other. more appropriate models for describing the developmcnt of tourist arcas and the behaviour of the market towards them. An intriguing alternative to the tourist-area life cycle was proposed by that
Gross,
who suggested
of natural 271. Gross, ‘Toward a general theory of product evolution: a rejection of the ‘product life cycle’ concept’, MS/ Working Paper, No P43-10, September 1968.
market selection individual
selection
the evolution as ;I
model
of species
cconomv.77 The basic concents _, theory and tourism development organism
in the
as described
of the evolution
evolution
TOURISM
theory
of
the
are
by the theory
of products Darwinian
strikingly
is analogous
MANAGEMENT
in
a free
natural
similar.
The
to a tourist
September
1986
Can rhe tourist-area lift, cwle he made opernriord?
area. The concept of ‘variation’ of species is analogous to the differences among tourist areas. The concept of ‘overpopulation’ relates to the tremendous number and explosion of tourist-area choices. The “struggles for existence” and “the survival of the fittest” are quite descriptive of the tourism market-place in which only a few tourist areas are ever successful. The result of too many tourist areas (overcapacity) is competition among species (tourist areas). In this competition, those best suited to the “environment” (the market-place) have the best chance for success (survival and growth). The important lessons from this analogy to “tourist area evolution” are in some of the survival strategies proposed by the biologists:
l
0
0
“Whenever there is strong competition. specialization undoubtedThis specialization is an important ly gives an advantage”.‘* rationale for tourist-area specialization. As the environment changes. the characteristics that determine suitability also change. causing evolutionary development. This statement emphasizes. more than anything else, the need for long-range planning of tourist-area strategy. Highly specialized species that are adopted for one specific set of environmental conditions are less capable of adjusting themselves to sudden or drastic changes of environment than are unspecialized forms.“’ This conclusion suggests the intriguing hypothesis that tourist areas aimed at narrow market segments or specialized applications have shorter ‘life cycles’ than more broadly based tourist areas.
There are many other insights into tourist-area evolution that can be gained by considering the theory of evolution of species. Surely the concepts of “convergence”. “adaptation” and “protective resemblance”, “inheritance” and “mutation” also have tourist area analogies.
Conclusion
28E Mayr. Sysfemabcs and the Or/gin of Spe&es, Dover, New York, 1964. ‘g/bid. 30Dhalla and Yuspeh, ‘Forget the product life cycle concept’. Harvard Business Review, Vol 54, January-February 1976, pp 108-l 12.
TOURISM
MANAGEMENT
In conclusion. tourism planners need to look beyond the tourist-area life-cycle concept if they are searching for meaningful insights as to how to manage a tourist area as it evolves. As Dhalla and Yuspeh argue. the product life cycle can be misleading and may force marketers and planners to discontinue their products prematurely when they enter a decline stage?” Such a response or action with regard to a tourist area is likely to prove disastrous. The economic and social dislocations would be severe. If tourist arca planners and managers are to be more effective they must broaden their thinking about tourist-area evolution, and how it can best be managed given the economic. political and other forces that
September
shape
1986
it.
167
area; life-cycle concept;
K. Michael Haywood IS Associate Professor at the School of Hotel and Food AdmInistratIon, University of Guelph, Guelph. Ontario. Canada. ‘John E. Rosenow and Gerreld L. Pulslpher. Tourism: The Good, the Bad, and the Ugly, Century Three Press, Lincoln, Nebraska. 1979. LOUIS Turner and John Ash, The Golden Hordes, Constable, London, 1975; and G. Young, Tourism, Blessfng or Bl/ghf7 Penguin. Harmondsworth, 1973. ‘R.W. Butler, ‘The concept of a tourist area cycle of evolution. Implications for management of resources’, Canadian Geographer, Vol 24. 1980, pp 512: W. Chnstaller. ‘Some conslderatlons of tourism location in Europe: the penpheral regions-underdeveloped countnesrecreation areas’, Papers of the Regional Scrence Assocralron. Vol 12. 7963, pp 95-105; and C. Stansheld, ‘Atlantic City and the resort cycle. Anna/s of Tourism Research, Vol 5. No 2. 1978, pp 238-251. 3lbid, Butler. %V Hovlnen, ‘A tourist cycle In Lancaster County. PennsylvanIa’. Canadian continued on page 155
154
Considerable attention has been given in the tourism literature belief that tourist areas not only change over time but change worse : 0 0
l l
to the for the
pristine beauty becomes soiled with tacky development; highbrow tourists are replaced by the lowbrow: residents initially enamoured with the industry become disenchanted; and eventually tourism with all its inherent promises self-destructs. ’
Conceptualizers of this inevitable change characterize tourist tireas as passing through life stages that progress from birth to death.? Represented by the S-shaped logistic curve. which has its basis and acceptance in biological studies. Butler has suggested that the life cycle is comprised of the following stages--an exploration stage. an involvement stage, ;I development stage. ;I consolidation stage, a stagnation stage :rnd either ;I decline stilge or rejuvenation stage.” Figure 1 illustrates this typical cycle. Currently the life-cycle concept seems to be enjoying ;I high degree of acceptance. Researchers such x Hovinen and Mayer-Arendt have employed the concept to explain the rise irnd fall of ;i variety of tourist destinations.’ The overall simplicity of the concept and its life-to-death analogy have also helped re-orientate thinking about tourist areas by suggesting new rclationhhips that otherwise may not have been obvious. For example. Cohen’s classification of tourists suggests that a destination will be initi:llly visited by ;I few ‘drifters’ and ‘explorers’ followed by large numbers of ‘individual mass tourists’ and ‘organized mass tourists’.’ As such the tourist-:uea life cycle serves as a descriptive model of the st:tges of market acceptance. and represents the ‘supply’ view of the diffusion model. However, the true test of the importance of the life cycle must he based on its possible use x a tool for the planning and management of tourist areas. As Butler emphasizes: Tourist
attractions
ah finite carefully kept
and
protected
within
maintained
xc
not infinite
pos>ihly
and timeless
non-rencwahle
and preserved.
predetermined
but should
resources.
The development
capacity
limits.
They
be viewed could
and treated
then
be more
of the tourist area could be
and its potential
competitiveness
over ;I longer period.”
If the tourist-area
life cycle is to be used as ;I management
0261~5177/861030154-14$03.00
@) 1986 Butterworth
or planning
& Co (Publishers)
Ltd
Can the rourisr-area life cycle he made operarional:’
ConsoJidatlon
-a-_
elements of capauty
Number tourists
Explomtion
Figure 1. Stages in the tourist life cycle. Source: Butler, CJ~tit, Ref 2.
area
tool, however, it must first be made operational. In other words. is it possible to determine or predict unambiguously the exact position or stage of a tourist area? Does knowledge of the life-cycle stage help in determining specific management actions? In an attempt to answer these questions this paper examines six major conceptual and measurement decisions necessary for making the tourist-area life cycle operational. The use of a life cycle as a model for tourism forecasting and a guideline for marketing strategy is then considered. The paper concludes with some thoughts on the evolution of tourist areas as related to the need for tourism planning. development. and marketing.
Concept and measurement Six operational
decisions
In order to make the tourist-area life cycle operational six major conceptual and measurement decisions need to be considered: unit of analysis; l relevant market; l l pattern and stages of the tourist area of life cycle; identification of the area’s shape in the life cycle; l 0 determination of the unit of measurement; and l determination of the relevant time unit. (I)
continued
from page 154
Geographer, Vol
25, No 3, 1981, pp 283-286; and K. Meyer-Arendt, ‘The Grand Isle, Louisiana Resort Cycle’, Anna/s of Tourism Research, Vol 12, 1985, pp 449-465. ‘E. Cohen, ‘Towards a sociology of international tourism’, Social Research, Vol 39, 1972, pp 164-182. ‘Butler, op cif, Ref 2. ‘R. Polli and V. Cook, ‘Validity of the product life cycle’, The Journal of Business, Vol 42, October 1969, p 390.
TOURISM
MANAGEMENT
Unit of analysis
What is the definition of a tourist area and how can it be clearly delineated? Should the tourist-area life cycle be undertaken for a specific region, a city or town, a designated area within the city or town, hotels or other specific tourist facilities? It is surprising that little attention in the tourism literature has been given to the identification of the most appropriate unit or units of analysis. In an attempt to validate the product life-cycle model in marketing, Polli and Cook concluded that the fit of the life-cycle model depends heavily on the definition of the product used and the relevancy of product class partitioning.’ For example, if the life cycle of hotels within a region is considered should the focus be on all types of lodging establishments? On motels? On hotels according to size, rate structure or location? Should campsites or hostels be included? Extend the life cycle to an entire resort area and
September
1986
155
Can the tourist-area
life cycle
he made operutronaP
questions arise as to boundaries and the types of businesses. facilities and tourist activities that should be included. Defining and delineating the unit of analysis for a resort area is the first and most crucial step in attempting to make the life cycle operational. While a life-cycle analysis could possibly be undertaken at any level. relationships among the life cycles of these various levels should also be considered. While no a priori rule can be established as to the “correct” unit of analysis. selection of the unit(s) of analysis should be based on need and intended use of the information.
Most applications of the tourist-area life cycle assume implicitly that the tourist market is homogeneous and composed primarily of one segment with distinct subsegments that differ from each other only in their “degree of innovativeness” or. as Cohen describes, their “degree of institutionalization”.’ These traditional approaches ignore the possibility of sequential entry into distinctly different market segments. each of which can be further segmented according to tourists’ degree of innovativeness or other relevant tourist characteristics. Such sequential entry to various market segments may result in the type of tourist-area life cycle presented in Figure 7. For example, segment one may represent a ‘jet set’ of tourists; segment two a convention or meetings market; and segment three an inclusive tour market. While most tourist-area life cycle studies have focused on visitation at the total market level, there arc occasions in which it may be appropriate and important to consider the resort-area life cycle by market type (cg domestic versus international tourists), distribution method (eg travel agent versus independent booking) or market segment (eg family versus corporate group).
‘Cohen, op ot. Ref 5 ‘R. Pearl, Sfud/es m Human Puology, Wilkins and Wllklns. Baltimore, 1925.
Figure
2. Tourist
sequential ments.
156
entry
area
life cycle
with
to three
market
seg-
function.
applied situations
the S-shaped logistic This function was first popularized by Pearl and has been to a variety of biological phenomena and other growth such as the spread of epidemics and rumours.”
Time
TOURISM
MANAGEMENT
September
1986
Can the tour&-area
life cycle be made operational?
This tourist-area life cycle, although suggested by conceptual analogies from biological life cycles and the theory and findings concerning the diffusion and adoption of innovations is only one of many possible empirical patterns.‘O Even Butler suggests that the “exploration” and “involvement” stages may be of minor significance for an instant resort such as Cancun, Mexico.” Hovinen indicates that “Lancaster County (Pennsylvania) shows significant departures from Butler’s postulated ‘consolidation’ and ‘stagnation’ stages as well as from the ‘exploration’, shape of his postulated curve of growth of numbers of tourists through Clearly there are a variety of possible tourist-area cycle-oftime”.” evolution curves such as those presented in Figure 3. The existence of a variety of non-S-shaped curve patterns implies that there are other than the traditional stages to the tourist-area life cycle. In fact, even those who accept the S-shaped curve as the dominant pattern of the tourist-area cycle-of-evolution identify a varying number of stages and labels for these stages. For example, Noranha identifies three stages:
l l “E.M. Rogers, ‘New product adoption and diffusion’, Journal of Consumer Research, Vol 2, March 1976, pp 290-330. “Butler, op tit, Ref 5. “Hovinen, op cit. Ref 4. ‘%. Noranha, Review of the Sociological Literature in Tourism, World Bank, New York, 1976.
0
discovery; local response institutionalized
and initiative; and “institutionalization”.”
(4) Identifying tourist area’s stage in the life cycle Two key questions life-cycle concept: 0
face
how to determine
I
Nurdu
twists
of
those
who
attempt
the stage of a tourist
I
to use the
area;
tourist-area
and
A well - nwnaged and sofe urban centre thot enjoys 0 variety of tourist attractions ond antirues to attract of visitors
I
o consistent
number
Time
*N~Wro‘t tourists
An instant resort complex such OS Concud, Mexico (Butler, 1980 1 thot hos strong drowing power
7 I/
Y
Time
A
regional oreo that peaks ond falls
in terms
of
Numter
visitations. Tim fall is due to o “scae’ ond on increase in costs of gosdine - Lancaster County, Pennsylvania ( Hovinen , 1981)
of
tourists
Time 4
Number twists
Figure 3. Alternate cycle patterns.
TOURISM
tourist area
MANAGEMENT
of
life
I/s
An urban resort such OS Atlantic City a new major ottroction - gotrUing (Stonsfield , 1978 1
thot odds
Time
September
1986
157
0
how to determine another.
when
a tourist
area
moves
from one stage
to
Given that time-series data rarely obey the theoretical pattern of a smooth curve. and that the S-shaped curve is only one of a number of possible life-cycle patterns. it is not at all clear whether a tourist area’s position in its cycle and its shift from one stage to another can be identified simply by observing the historical pattern of the number of tourists. A possible operational approach to the identification of a tourist area’s position can be based on the possible change in the number of tourists from one year to the next. These changes can be plotted as a normal distribution with zero mean. If a tourist area has a percentage it could be classified in the decline stage. change of less than -0.50 Tourist arcas with percentage changes greater than 0.5% can be classified as being in the development stage and tourist areas in the range of +O.Sa could be considered to be in the consolidation and stagnation stages. The theoretical distribution and the corresponding stages are presented in Figure -1. Identifying the length of time of each stage and the exact point at which the
a tourist
area shifts
use of the
rates, market tourist arc;1s.
from
tourist-area
one stage to another
life-cycle
accessibility
is closely
related
to
concept
for forecasting visitation :md actions of competitive
and acceptance.
While the tourist-area life-cycle is baaed on the size of the tourist population, there :lrc still ;I number of unresolved issues. The first revolves around the issue of carrying capacity or saturation level. As Hovincn says: Butler’s hypothesized ;IT~;I's
carrying
;~ttr;ictivenes\ therefore exe
for
stage
hecome
vihitorx.
importanl
illustrate\
‘decline‘
capacity
if hi\
A
method
argument
the potenti:rl
ret\
on the
esceed~d
and
assumption that
that area
g an area‘s
of definin
ih to he accepted,
difficultic~.
the
A \ingle
hut
elements
loses
some
carrying
capacity
its k
Lancaster County
the
carrying
of an of
capxity
thwshold
Cansdtdation stage
Frequency
Percentage
Figure 4. Identifying cycle
158
stages.
tourist
area
life-
Source : Bcsed Jwnw~
on Polli md d
Bus/ness,
change m the number of tourists
Cook’s “Volidlty Volume 42,
TOURISM
of the Product
Life Cycle”
1969
MANAGEMENT
September
1986
Can rhe rourisr-area life cycle he made operational?
clearly does not exist: instead the area’s capacity consists of different cultural and natural elements which vary both spatially within the county and temporally throughout the year.lJ Furthermore, as Hovinen emphasizes, carrying capacity may be more a perceptual issue.‘” Residents may believe that the number of tourists may be exceeded before the end of the development stage whereas some visitors and business people may believe that the carrying capacity may far exceed the numbers of tourists reached during either a consolidation or a stagnation stage. This suggests that if the use of the number of tourists is to be used as a measure. consideration should be given to such ameliorating variables as: 0 0 0 0
the length of stay; dispersion of tourists within and throughout characteristics of the tourist; and the time of year in which the visit is made.
the tourist
area;
The second issue concerns the appropriateness of using a touristexpenditure model instead of tourist population to determine the shape, pattern and stage of the life cycle. If such a measure were used a subsequent question would be whether this expenditure should measure unit sales (eg number of visits to a park or a museum) or dollar values. Then. of course, there is the question as to whether the analysis of this expenditure should be based on actual expenditure or adjusted should they be adjusted to per capita expenditure. For example, expenditure? Corrected for seasonal or cyclical periods? Adjusted for general economic conditions (current versus real prices), etc. Measurement could go beyond the typical visitation and expenditure measures and include such measures as market-share figures or profitability. A decline in tourist volume or tourist expenditure is not necessarily an indication that a tourist area has entered a stagnation or decline stage. Tourist volume may be down throughout a region or county and yet a given tourist area’s share may be unchanged or even improved. A measure of profitability. while difficult to obtain. may be quite appropriate. Traditionally individual businesses that reach maturity or find themselves in a stagnation stage tend to experience a serious decline in profitability. even before reaching this stage. It is very difficult for a company or even I tourist area to rejuvenate unless the necessary resources, particularly financial resources are available. The inevitability of the decline stage is in large part due to a lack of resources and resourcefulness. (6) Determirlirlg the relewnt
“.Hovrnen, op tit, Ref 4. 15/bid.
TOURISM
MANAGEMENT
time unit
Most tourist-area cycles arc based on annual data. Yet it is not clear why the analysis should be limited to this unit of time. In many instances, it may be appropriate to develop a tourist-area cycle based on quarterly or monthly data. Given that the shorter the time period the higher the likelihood of seasonal and other fluctuations, it may be appropriate to use some form of moving averajie. However, this in no way denies the need for more longitudinal data. If the tourist-area cycle-of-evolution has a major shortcoming it is the lack of empirical data over the long term.
September
1986
159
Can the tourisr-area life cycle he made operarional?
Tourist-area
life cycle as forecasting model
A natural use of the tourist-area life cycle is the prediction of the visitation and/or expenditure rate. Assuming the general S-shaped pattern, with information on visitation and/or expenditure for the first few periods and a simple predictive model, the visitation and expenditure rates in subsequent periods can be predicted. Considerable effort has been devoted to the development of product life-cycle-based forecasting models in the marketing literature and many of these have applicability to tourism. The two basic models of Brady and Adams, and Fourt and Woodlock. as well as similar diffusion models can generally be described in terms of four distinguishing features: 0
0 0 0
A ceiling that reflects in most cases, the researcher’s belief as to the expected saturation level. Most of the models assume a constant saturation level, although they can be modified to incorporate a somewhat more realistic situation in which the level of saturation changes (at a decreasing rate) over time. An S-shaped diffusion curve. In a few cases, an exponential growth curve is proposed. An assumption of homogeneity of customers. No explicit conclusion of marketing strategy or the action of competitors. If’
The ceiling/saturation assumption can be tested empirically. and evidence in the marketing and recreational geography literature suggests that it is a reasonable assumption, especially when viewed not as a constant, but as a function of various corporate, competitive and environmental forces. The specific level of saturation or carrying capacity for a tourism area would have to be based on all relevant information about similar tourist areas and an assessment of the potential impact of the area’s and competitive areas’ actions on the market place, given alternative environmental scenarios. Furthermore, in any forecasting model utilizing a saturation level. it might be useful to conduct sensitivity analyses to determine how sensitive the solution is to different assumptions concerning the saturation level. With regard to the shape of the diffusion function evidence seems to indicate that the S-shaped curve is only one of many possible functions. Again utilization of visitation and/or expenditure data for related and similar tourist areas, and sensitivity analyses are essential in the development of any model. Imitatiotl
‘6D. Brady and F.G. Adams, The Diffusion of New Products and their impact on Consumer Expenditures, Economics Research Unit, University of Pennsylvania. Philadelphia, 1962; and L.A. Fouri and J.W. Woodlock, ‘Early prediction of market success for new arocerv nroducls’. Journal of Marketing, Vol 25, *&tober 1.960, pp 31-36.
17Bass, 1969. ‘*Cohen,
160
op tit, Ref 5.
One of the major developments in predicting the life cycle of consumer products has been the recognition that consumers are heterogeneous. Bass. for example. segmented the purchasing population into innovatars, who buy the product because they like it, and imitators, whose decision to buy is in’fluenced by the number of people who have already bought the product.” The same could be true for tourist areas. The number of visits and amount of expenditure would be a function of the relationship between the two populations, (or as Cohen suggests a relationship between individual travellers and institutionalized Ix The higher the imitation or institutionalized coefficient, the tourists).
TOURISM
MANAGEMENT
September
1986
Can the tourisr-area life cycle be made operarional?
higher the peak number of tourists, but as suggested by Polli and Cook in their study of consumer products, this could also result in a drop in tourist expenditure as the innovators or ‘jet set’ tourists move on to new or more exclusive destinations and as prices fall.‘” Experience
Another approach to dealing with tourist heterogeneity is the suggestion that the probability of visiting may depend on a person’s travel experience and prior visits to the destination or a similar destination. In other words, experience determines a tourist’s visitation priority pattern. In some cases this may result in regular return visits particularly among those who have a vested interest in the destination (home of ownership of a cottage. condominium or friends and relatives, timeshare unit). The priority to return may be quite low, particularly if the destination were unappealing, thoroughly explored during the first visit, or if there is a desire to continue to seek out more new and novel destinations. Forecasting
Most tourist diffusion models tend to examine the relationship between time and visitation and/or expenditure. ignoring one of the most central concepts-that of the conditional forecasting. That is, given that visitation and expenditure are a function of the tourist area’s marketing strategy, the forecasting should reflect alternative strategies resulting in a series of forecasting curves. More sophisticated approaches to forecasting could take into account not only the tourist area’s marketing strategy, but also the actions and reactions of competing tourist areas. How good are tourist visitation and expenditure forecasts of tourist-area life-cycle models? It seems that most models are concerned with, and able to predict, the development stage; and poor at predicting the stagnation and decline stage. However, tourist forecasters may want to examine Cooke and Edmondson’s 1973 LIFER (life cycle forecaster) model.20 Another approach has been suggested by Wilson who focused on the discovery of leading indicators of the timing of the stagnation may be: stage. 21 Suggested indicators for tourism forecasters “Ft. Polli and V. Cook, ‘Product life cycle models: a review paper’, MS/ Working Paper, No P-43-2. November 1967. *“E. Cooke and B. Edmondson, ‘Computer aided product life cycle forecasts for new product investment decisions’, rn Increasing Marketing Productivity and Conceptual and Methodological Foundations of Marketing, T. Green, ed, American Marketing Association, Chicago, 1973, pp 373 377. “A. Wilson, ‘Industrial marketing research in Britarn’, Journal of Marketinq Research. Vol 6, February, 1969, pp 15->8. *“R.D. Buzzell. ‘Comoetetive behaviour and product life cycle’.‘AMA Proceedings, American Marketing Association, Chicago, 1966, pp 46-68; T. Levitt, ‘Exploit the PLC’, Harvard Business Review, Vol 43, November-December 1965, pp 81-94; and J.E. Smallwood. ‘The product life cycle: a key to strategic marketing planning’, MSU Business Topics, Winter 1973, ~~‘29-35.
TOURISM
MANAGEMENT
0 0 0 0 0 0
l
a declining proportion of first-time visitors versus return visitors; declining profits of major tourist businesses; tourism industry overcapacity; appearance of new and accessible destinations; decline in elasticity of advertising coupled with increased price elasticity; present visitors’ length of stay; and style and period-of-life changes among prospective market segments.
Guideline for marketing strategy At present the management of a tourist area, from both a macro and a micro point of view, tends to be focused almost entirely on marketing. Not surprisingly there is a wealth of information on strategic marketing actions that could be applied to each stage of the tourist-area cycle.‘2 Recommendations have frequently been made concerning the type and level of advertising, pricing, distribution and other product/marketing
September
1986
161
required for each stage. However, these attempts to prescribe a marketing strategy and guide the allocation of marketing resources over the stages of the cycle are to a large extent unsupported by empirical evidence. For a tourist area it would be erroneous to assume that the dominant determinant of a marketing strategy is the stage of the life cycle. while the differences among tourist areas and markets are ignored. Furthermore, it is implicit in such an assumption that. at any one stage of the cycle. a tourist arca has only a single ‘reasonable’ marketing strategy to follow. This implicit assumption is not only misleading but also dangerous, since it can constrain creativity in generating new marketing strategies. The correct question, therefore. is not what specific strategy the tourist area should follow at each stage of the cycle. but. rather. how area’s stages in the cycle can be utilized in input of the tourist generating, developing and evaluating better marketing strategies. that the tourist-area life cycle Accepting this view suggests, therefore. can be utilized in two ways-namely life extension and incorporation of other inputs. activities
This strategy is based on the follow the life cycle (regardless height or shape of the curve). ‘market stretching’ is based on When very the
;I company outset
dwelops
basic premise that all tourist arcas do of the time dimension involved, or the According to Levitt ‘life extension’ or the important proposition that:
a new product
a series of actions
or service.
to be employed.
it should
at various
try to plan at the
subsequent
product’s existence so that its sales and profit curves are constantly
rather
than following
their
usual
declining
stage\
in
sustained
>lope.”
It might be difficult to follow Levitt’s advice and plan for all subsequent tourist area cycle extensions at the outset, yet the direction he suggests is most valuable. The four possible strategies he suggests arc as follows.
(I) Pronwting mow Jj.cytrcrit list nniotig crlrwtit l4ser.Y(tolrrists). Tourist areas could try to get visitors to increase their length of stay; attempt to encourage repeat visitation; provide more and better information/ signage to ensure visitors actually move throughout the tourist area in order that they may actually see and experience more of what the area has to offer. (2) Lkvdopitig tmm 1’uricd icr ot?lotlg currctit mv3 (toitrists). Most tourist areas enjoy a diversity and richness of resources that allow a visitor to enjoy ;I variety of experiences-social. cultural and physical. Too often a tourist area has developed a singular or popular image that may serve to initially attract the visitor: however, once attracted the visitor should bc made aware of other satisfying opportunities and pursuits.
(3) Creating rlcw~ U,SPS.Whether a tourist area decides to expand into centre as in gambling as in Atlantic City. NJ. or build a convention Toronto, Ontario, it is attempting to justify its continued existcncc as a tourist area, utilize existing resources. or renew or replace existing and outdated facilities. Such attempts to attract new markets, if carefully 23/hid, Levitt.
162
planned,
need
flagging
industry
not be viewed (as some
as desperate
tourism
TOURISM
last-ditch
researchers
would
MANAGEMENT
efforts have
to resurrect
a
one believe).
September
1986
Can rhe tourisr-arealife cycle be ma& (4)
Finding
new users (tourists)
by expanding
operurronal?
the market.
Diversification into such businesses as gambling and conventions is one way of attracting tourists who may not otherwise visit the area. By justifying the existence of the tourist area and overcoming such obstacles as a lack of information or interest, money or motivation. new visitors could be attracted. These strategies and examples suggest some of the ways a tourist region or destination can extend its life cycle. At a more general level, however. Levitt’s four suggested strategies can be viewed as a subject of a broader array of strategies available for tourism management. Figure 5 suggests a more general framework for such life-extension strategies. These are based on combinations of four major dimensions: 0
l 0
0
the distinction between an existing tourist destination and new facilities or activities within that destination; the distinction between attracting existing tourist market segments and new segments; the distinction between visitation of a tourist area based upon a given positioning strategy versus its promotion using a new or additional positioning strategy to improve its competitiveness with other tourist areas: and the distinction between increasing the frequency of visitation and the length of stay and expenditure levels and patterns.
It is important to note that these four dimensions can result in 14 possible combinations and that none of these strategies (or the four Levitt strategies) suggests specific product, price, promotion or distribution strategies, as do the strategies proposed by product-life-cycle writers such as Smallwood.‘” Incorporation 241b/d;and Smallwood, op c/t, Ret 22.
The
second
of other inputs
approach
to overcoming
some
Present tourist segments
Present postioning
Existing facilities activities in tourist region
of the limitations
market
l%tentiol positioning
of the
F’atentlol tourist morket segments
lmtiol positioning
Subsequent positlonmq
Frequency of vwtaticn Length of stay expenditure levels and potterns
;
Frequency of wsltohon Additions to tovist regions Product
Figure 5. A framework for tourist aiea life extension strategies.
TOURISM
MANAGEMENT
September
1986
Lenpth of stay, expaditure levels and patterns
163
tourist-area life-cycle concept involves incorporating information on a tourist area’s position in its life cycle with information on market share or market share and profitability. In comparison to marketers and planners of consumer products who incorporate this information as ;I matter of course, tourism planners and marketers will find it more difficult. However. the product portfolio models offer ;I set of dimensions on which a tourist area could be analysed (market share as a measure of strength, growth as a measure of attraction. as well as other dimensions such as profitability, expected return and risk). A review of Catry and Chevaliar, and Wind and Claycamp will reveal a comprchensive approach as to how marketers identify a product’s position on its relevant performance dimensions.‘5 Since most life-cycle models propose a parallel profit curve (low at introductory stages, rising until a stage in the growth phase Lvhere profits level off and start declining) tourism planners could attempt to do the same in their life-cycle models. One good reason for doing so is that development, marketing and operational costs. not to mention allocated other economic and social costs. need to be properly throughout the life cycle. Most tourist business practitioners recognize the fact that the nature and number of competitive firms and destinations is increasing rapidly. It would be beneficial, therefore. to examine explicitly the competitive environment and the changes over time. Market share can be used to measure the changing competitive structure of the tourism market and should be supplemented by an analysis of direct and indirect compctition and the identifiable competitive actions (such as price cutting, increased promotion. addition of new facilities and activities) at various stages of the competitive cycle.
Evolution To~rrism
of tourist areas
plattttitt~
rrttri
tttuttqctttettt
Evolution of tourism areas is of critical importance for tourism planners and managers. The evolution process has ;I positive or negative effect not only on the basic attractiveness of the area and its tourism resources. but on the people who live and work in the community, on the visitors who come into the arca. and on the tourism industry as a continued investment opportunity. Consequently, it is often necessary to make adjustments to ensure that the industry serves the needs of all groups and publics.“‘ Understanding the process of tourist area evolution and because the cost of being able to predict change arc also important as the need for change becomes more reacting usunllv incrcascs obvious. Moreover. the benefit from tourist-area planning is the highest for
the tourist The
area that
starting
point
utilizes
for
it.
analysing
tourist-area
evolution
should
be
:I
framework
‘“Catry and Chevallar, 1974; and Wind and Claycamp, 1976. 26K.M. Haywood, ‘Criteria for evaluating the social performance of tourism development projects’, Tourism as a Facfor on National and Regronal Development, Department of Geography, Trent University, Peterborough. pp 74-79.
of structured analysis. The reason for this is that tourism like any industry is deeply rooted in an underlying economic and political structure whch is comprised of seven major economic and social forces. These are shown in Figure 6. The coll&tive strength of these forces determines
the
ultimate
SLICCC'SS
of
any
tourist
area.
and
hence
its
evolution. (1) tion
Riwiry for
uttwttg
the prized
existittg
tourist
possession
ureas.
and scarcest
TOURISM
Tourist
areas
resource
MANAGEMENT
are in competi-
of all-the
September
tourist.
1986
Can rhe tourist-area
life cycle he made operational?
concerned publics who oppose or are threatened by towsm and tourism
firms, taJr opemtors, travel intermediaries, OaMnmodation and suppliers -
Figure 6. Structural
forces
driving
tourist area evolution.
This is accomplished by competing for top-of-mind-awareness among selected market segments. This jockeying for position requires use of advertising and creation of images (eg “It is better in the Bahamas”), pricing (eg Westours, Alaska vacation “Seal the deal before December 31st and save $300”), new attractions (eg Toronto’s CN Tower), and promises of increased service and hospitality (eg Helmsley Hotel “1 won’t be treated like another room number, why should you”). (2) Developers and developmc~nt of ?lew tourist ureus. New entrants to the tourism industry introduce new and novel attractions and amenities. Coupled with sufficient marketing clout to attract visitors, visitation rates and profitability in existing tourist areas could suffer. (3) Substitutes for the tolrrismltrrrv~~l experience. The tourism industry competes in a broad sense. within the leisure industry. For example, people can opt to travel vicariously at home by using their VCR and renting movies; or, they can install their own swimming pool in their backyard. Products or services that provide virtually the same function as travel and are perceived as having a better price/value relationship are candidates for substitution. and concerned publics who oppose tourism or Tourism is a phenomenon that takes place, is produced or is performed within people’s communities or home surroundings. Moreover. tourism utilizes resources which many people deem scarce, fragile and precious. Consequently, there exists a desire to protect and save these resources either from developers who might greedily and uncaringly exploit them, or from visitors who may not fully appreciate their symbolism and importance. These protectionist forces (4) Envirorlmentulists
tourism
TOURISM
MANAGEMENT
September
1986
developmenf.
165
curtail development and change; or. at the very least, encourage aesthetic sensibilities of developers and visitors.
can
(5) Transportabon companies, tour accommodation und suppliers-heir
the
operarors, rruvel inrermediarie.s, hrrrguining power. The tourism
industry consists of a wide variety of interrelated and interdependent businesses that facilitate and direct visitors to specific destinations. These businesses can either increase or decrease the cost of travel to and within particular tourist areas. Some of these intermediaries are large companies with considerable bargaining power. As a result they can either encourage or discourage travel to a particular area: and they can squeeze profitability out of an industry. eg tour operators bargain with hotels for reduced room rates by trading off large blocks of guaranteed room-nights. (6) Touri.st.s-their tweeds, Mwnfs. perwpfions, expecmfi0n.s (itld price sensirivi~y. The travelling public is large. diverse and demanding. No tourist area can compete successfully without carefully considering who its visitors arc or who it wants its visitors to be. Whatever the situation a tourist area must offer and be able to deliver a ‘tourist experience’ that is unique and intensely satisfying. Experiences that are second rate quickly result in ;I declining tourist hasc. (7) (;o~~crntnetlrrrl, politicrrl rend reglrlrrtor~ bodies Nnd forces. Depcnding on economic and social priorities. governments have a profound impact on the success of the industry. Policies and regulations with regard to taxation, education, immigration and customs, transport, marketing. culture. environment, development. financial assistance, and industry - government cooperation can either assist industry growth and development or strangle it. Di.scirs.sioti
Any
significant
considerable
change
impact
in these
on a tourist
seven area.
For
underlying this reason,
forces will have it can bc argued
viewed, ie 2s ;I the tourist-area life-cycle model, as it is currently biological life cycle, provides insufficient insight into the development of policy and planning for tourism areas. It does nor consider how the tourist area or competing arcas can affect the shape of the curve; and if the life cycle is taken as given. the result may be an undesirable self-fulfilling prophecy. Some may even question whether the life cycle has provided much more than the acceptance of the premise that all tourist areas e\,entually decline. Tourism forecasting models also owe little to the life sciences: the major developments in these models have occurred within marketing. management science, and econometrics or by those who have been concerned with conditional forecasting. Given the questionable benefit of the life-cycle model, one may ask whether there are other. more appropriate models for describing the developmcnt of tourist arcas and the behaviour of the market towards them. An intriguing alternative to the tourist-area life cycle was proposed by that
Gross,
who suggested
of natural 271. Gross, ‘Toward a general theory of product evolution: a rejection of the ‘product life cycle’ concept’, MS/ Working Paper, No P43-10, September 1968.
market selection individual
selection
the evolution as ;I
model
of species
cconomv.77 The basic concents _, theory and tourism development organism
in the
as described
of the evolution
evolution
TOURISM
theory
of
the
are
by the theory
of products Darwinian
strikingly
is analogous
MANAGEMENT
in
a free
natural
similar.
The
to a tourist
September
1986
Can rhe tourist-area lift, cwle he made opernriord?
area. The concept of ‘variation’ of species is analogous to the differences among tourist areas. The concept of ‘overpopulation’ relates to the tremendous number and explosion of tourist-area choices. The “struggles for existence” and “the survival of the fittest” are quite descriptive of the tourism market-place in which only a few tourist areas are ever successful. The result of too many tourist areas (overcapacity) is competition among species (tourist areas). In this competition, those best suited to the “environment” (the market-place) have the best chance for success (survival and growth). The important lessons from this analogy to “tourist area evolution” are in some of the survival strategies proposed by the biologists:
l
0
0
“Whenever there is strong competition. specialization undoubtedThis specialization is an important ly gives an advantage”.‘* rationale for tourist-area specialization. As the environment changes. the characteristics that determine suitability also change. causing evolutionary development. This statement emphasizes. more than anything else, the need for long-range planning of tourist-area strategy. Highly specialized species that are adopted for one specific set of environmental conditions are less capable of adjusting themselves to sudden or drastic changes of environment than are unspecialized forms.“’ This conclusion suggests the intriguing hypothesis that tourist areas aimed at narrow market segments or specialized applications have shorter ‘life cycles’ than more broadly based tourist areas.
There are many other insights into tourist-area evolution that can be gained by considering the theory of evolution of species. Surely the concepts of “convergence”. “adaptation” and “protective resemblance”, “inheritance” and “mutation” also have tourist area analogies.
Conclusion
28E Mayr. Sysfemabcs and the Or/gin of Spe&es, Dover, New York, 1964. ‘g/bid. 30Dhalla and Yuspeh, ‘Forget the product life cycle concept’. Harvard Business Review, Vol 54, January-February 1976, pp 108-l 12.
TOURISM
MANAGEMENT
In conclusion. tourism planners need to look beyond the tourist-area life-cycle concept if they are searching for meaningful insights as to how to manage a tourist area as it evolves. As Dhalla and Yuspeh argue. the product life cycle can be misleading and may force marketers and planners to discontinue their products prematurely when they enter a decline stage?” Such a response or action with regard to a tourist area is likely to prove disastrous. The economic and social dislocations would be severe. If tourist arca planners and managers are to be more effective they must broaden their thinking about tourist-area evolution, and how it can best be managed given the economic. political and other forces that
September
shape
1986
it.
167