Mediterranean destinations: Is there a competition?

University Degree Business and Administrative studies

MEDITERRANEAN DESTINATIONS: IS THERE A COMPETITION?

INTRODUCTION

“Marketing success is based both on marketing strategy factors (the marketing mix) and marketing environmental factors. These factors make up the hospitality and travel marketing environment” (Morrison, 2002). One of the most important factors that have expanded rapidly in the tourism industry is competition.

Nowadays tourism industry faces extensive competition in the face of newly developed destinations that have all the potential to benefit from their tourism industry development and compete with the traditional destinations. Newly developed destinations attract their customers by a variety of high-quality services and cheap prices and already follow a coordinated marketing strategy. However, numerous mature Mediterranean destinations such as Greece, Italy, Spain and Portugal remain among the most visiting countries in the world because of its culture, heritage and developed tourism facilities. In this paper we tried to analyze the factor of competition in global gauge taking into consideration several destinations in Mediterranean area and to outline major trends in the tourism industry development in this region.

The paper consists of three chapters. In first chapter we indicated main trends in the world tourism development, second chapter investigates tourism industry in each country and in the third chapter we briefly analyzed the results of marketing research which was conducted during Philoxenia exhibition held in Thessaloniki in October 2003.

CHAPTER 1. MAIN TRENDS IN THE WORLD TOURISM DEVELOPMENT

“In the past two years international tourism has, first and foremost, been reigned by the combination of an overall weak economy and a high level on uncertainty because of the struggle against terrorism and the looming Iraq conflict” (WTO Barometer, 2003). The Iraq conflict and terrorist attacks caused and probably will continue to influence negatively a demand of air transportation, interregional travel and travel to destinations that are geographically close to the zone of conflict. The emergence of SARS also deceased the demand for tourism worldwide.

The negative trends in tourism are outlined through the statistics of the International Labour Organization (ILO), according to which during the last two years the number of people occupied in tourist industry has fallen down by 6,6 million. After 2001, when the world economic drop was succeeded by fear of traveling due to the terrorist attacks in the USA, the tourist industry hoped for upturn, which, however, did not take place in 2002. The terrorist attacks aroused fears for safety and made many tourists postpone or even cancel their traveling plans. In 2001 revenue from international tourism have dropped by 5.1% and the greatest losses have been born by the Near East and the West America. The number of foreign tourists in the USA has decreased by 30% compared to the year before the terrorist attacks. Australia and Egypt also have undergone a significant drop, felt also by some European countries, which have been popular among the American tourists like Switzerland, Germany and Austria. On the other hand countries like Croatia, Cyprus, Slovenia and Turkey marked an increase of the tourists flow from the neighboring countries.

Nevertheless, despite the decrease of overseas arrivals, Europe continues to be the leader on the world tourist map. Last year the tourist visits on the continent have increased by 2.4% and this is 58% of the world tourist flow. Many Mediterranean destinations are popular tourism destinations receiving a massive influx of visitors each year.

CHAPTER 2. TOURISM INDUSTRY IN MEDITERRANEAN REGION. COUNTRIES’ OVERVIEW

In this paper we decided to analyze the following seven Mediterranean destinations: Greece, Italy, Spain, Portugal, Turkey, Bulgaria and Croatia. We divided them into two groups: the traditional and newly developed destinations. By “newly-developed destinations” we imply countries in which tourism sector started to develop rapidly over the last decade whereas by “traditional destinations” we consider countries where tourism is thriving for a considerable number of years.

TRADITIONAL DESTINATIONS

GREECE

According to the World Tourism Organization Greece held the 16th place internationally on the list of tourist destinations in 2002. Europe with its 90% of arrivals is considered to be Greece’s primary tourism market. According to Economist Intelligence Unit statistics the total number of arrivals in 2002 was about 12,7 mln tourists. Tourism represents about 15% of the domestic income of Greece and accounts around 10% of employment (EIU, 2003). Two-thirds of tourists are from the European Union (around 9 million), the majority of whom come from the UK, Germany, Italy, France and Austria. Tourists from outside ...

This is a preview of the whole essay

TRADITIONAL DESTINATIONS

GREECE

The distinctive feature of Greek tourism is that it has a seasonal attribute. Greek tourism had been based for more than five decades on the product of “sea and sun” and the majority of tourists arrive in Greece during a 90-day window between mid-June and mid-September, with the result that a large part of the hotel stock is closed during the off-season. Therefore, during the wintertime the demand for tourism significantly decreases. Official policy is to try to diversify to spread arrivals throughout the year by developing conference tourism, yachting, golf, skiing in the mountainous area, spa and medical tourism.

The approach of the Athens 2004 Olympics has brought increased optimism regarding the future of the Greek tourism industry. It is estimated that approximately 145,000 visitors per day will visit the Games and be accommodated in hotels, cruise ships, campsites and residential houses. Apart from the fact that in the immediate future, tourists will probably be attracted to potentially safer destinations, the staging of the Olympic Games will have a determining effect on the future image of Greece and its potential in tourism.

In general, growth prospects for the tourism industry in Greece are highly promising. Taking into account the approach of the Olympic Games, Greece is expected to become an enhanced destination of choice on the global scale. The return of Olympics to their ancient birthplace offers a unique opportunity to showcase the country as modern tourist destination with an excellent combination of its traditional antiquity with world-class facilities.

However, the Greek tourism faces an increasing competition in the face of cheaper Mediterranean destinations like Turkey, Egypt, Tunisia and Morocco, as well as Spain, Italy and Portugal. Meanwhile destinations like Bulgaria and Croatia registered a significant increase in the tourist industry compared to the previous year. Greek prices are now rapidly approaching European levels, and other destinations in the region, such as Turkey and North Africa, can offer comparable sun and sea holidays at cheaper prices.

Nevertheless, it is expected that demand for travel and tourism will continue to grow and Greece will continue to be a preferred tourist destination because of its safe, crime-free and tourist friendly environment.

ITALY

Italy enjoys its 4th place in the world top tourism destinations for many years, according to the report of World Tourism Organization (WTO, 2002). However, during last decade the overall rise of arrivals and international expenditure has been less rapid compared to the previous decade.

The reductions of arrivals are mainly resulted from the worldwide recession and the competition brought about by newly developed destinations. According to the 2003 report of Italian State Tourism Board, Germany (for the number of visitors), America (for the quality of visitors) and Japan are the 3 most important foreign markets (ENTI, 2003). Although there were signs of growth concerning the emerging countries, such as Russia, Korea, New Zealand, Brazil, Australia, none of those countries can fill the gap left by the Americans who are usually 4-5 star tourists with a high amount of expenditure.

In order to keep its old foreign market and extent the supply of new market, ENIT and main tourist trade organizations are urging the government to make a firm commitment in the budget, targeted unitary and coordinated promotional campaigns and the development of tourism on the whole. “ The Italian tourist system is united in asking everyone to do their bit so that Italy can boost its persuasive image and competitiveness” (ENIT, 2003). Thus it can be guaranteed its long-standing continuity in the development of tourist economy.

SPAIN

Spain is one of the world leaders on the world tourism map ranked second by WTO in 2002. Spain is country rich in history, culture and diversity with a range of natural attractions, such as the golden beaches and green mountains. Tourism is one of the main sources of income and key development factors for this country. Despite the decrease of number of tourists in many destinations worldwide, Spain continues to keep the stable increase rate of tourist arrivals during the recent years. (Spain National Tourism Board-SNTB, 2003).

However, the number of reservations for the summer 2003 made by British tourists who are considered to be main customers has fallen down by 2% compared to 2002, while the reservations of the Germans have decreased by 30% in zones like the Balearic Islands (UBB Business Analyses, 2003). Among the reasons for the Spanish tourist industry drop is the threat of a conflict in the Near East and the economic recession. The British and Germans represent 50% of the summer tourist flow in Spain. That’s why the hotelkeepers apprehend serious drop in the prices. Nevertheless, Spain continues to be the most preferred Mediterranean destination.

PORTUGAL

Portugal is also one of the most attending tourist destinations in Europe because of its

rugged landscapes, sophisticated cities and sharply contrasting traditions. Portugal also has an advantageous geographic location along the Atlantic coast of Iberian peninsula which makes it a desired destination for many holiday makers.

Despite of all these advantages, Portugal is facing a furious competition from other destinations. However, in 2002 the revenues from tourism in Portugal have increased in spite of the slight decrease in the hotel night stays’ number registered by the Portugal National Statistical Institute. Thus, the number of hotel night stays in the country has decreased by 0.2% mainly to the foreign tourists decline. However, the revenues from tourism have gone up by 3.2% (UBB Business Analyses, 2003). The key element in the Portuguese governmental policy is elaborating a new strategy for tourism industry development, which is a main component of the government’s economic policy.

NEWLY-DEVELOPED DESTINATIONS

TURKEY

Turkey is 18th most visited country in the world and ranks 13th in tourism income. The Turkish Ministry of Tourism expects the country to be the 11th most popular destinations worldwide in 2005, with over 20 million tourists (Smid, Loewendahl-Ertural, 2002).

The tourism industry in Turkey is one of the most important exporting sectors of the Turkish economy that shows a year-by-year growth, only hindered by external forces such as the 1999 earthquake, terrorist attacks, Kosovo crisis and the war in Iraq. Recent terrorist attacks in Istanbul can also influence negatively the number of tourists visiting this country during next years. However, Turkey has a great potential for development and it can eventually continue to be one of the most preferred destinations in the next years, since it plans to develop the congress tourism, business tourism, trade exhibitions and sport tourism.

Most visitors that are coming to Turkey are holidaymakers on cheap package holidays, mainly from Germany and UK followed by other EU countries. Turkey attracts visitors for cultural and historical reasons. Besides, a large number of visitors from Eastern Europe are coming to big cities, such as Istanbul for shopping expeditions.

According to Economist Intelligence Unit, for 2003 the government has budgeted 450 million US dollars for stimulating the tourist industry, 100 million of which is allocated for advertising and improvement of the infrastructures. The remaining 250 mln would serve to stimulate the tourism business (EIU, 2003).

The Ministry of Tourism has compiled an action plan which outlined the short-term and long-term targets for the tourism industry development. Among the most important tasks are: to establish a Turkey trademark; to organize more and more diversified promotion campaigns; to introduce variations of tourism products and to spread arrivals throughout the year; to attract higher-income tourist groups by promoting conference tourism (Smid, Loewendahl-Ertural, 2002).

BULGARIA

Bulgaria is qualified as one of the most well positioned successful European destinations in 2002. The tourist sector in Bulgaria achieved very good results. The estimate is around USD 1.5 billion incomes and 8% tourist number increase versus the previous year (World Tourism Organization, 2003). Bulgaria has a rare combination of natural resources, environment and climatic conditions that make this country suitable for year-round tourism.

Considering the tourist resource and potential of Bulgaria, as well as the tourism-oriented policy of the country, the government funds for tourism are expected to be invested in the following directions: building up of infrastructure, advertising of the national tourist services and financing of projects and programs for improving the quality and competitiveness of Bulgarian tourism. Investing in these directions will lead to a significant encouragement of the Bulgarian tourism development, which would bring about a bigger demand and consumption of Bulgarian tourist services and respectively an increase of revenue from tourism. The investments in advertising of tourism in Bulgaria are also necessary, since it will lead to a better competitiveness of the Bulgarian tourist services and will increase significantly the number of arrivals to Bulgaria (United Bulgarian Bank, 2003).

CROATIA

Although small in size, Croatia has 5,835km coastline and 1,185 islands which all enjoy the warm Mediterranean climate. To be strict, Croatia is not a brand- new destination for European tourists. It received 7,049 million international visitors in 1990 which was just slightly lower than the figure of arrivals in Greece. How ever, this number dropped dramatically in the year period 1991-1999 due to the Kenova conflict.

Nonetheless, tourism began to recover in 2001 with 19% growth in tourist arrivals, followed by 6% growth in 2002 when 8,3 million tourists visited Croatia. (Economist intelligence Unit- EIU, 2003). The EIU also notes that the Croatian authorities, they are not satisfied with an image of being a low-cost destination, and have their sights on the higher end of the market, aiming to take advantages of the fact that much of the coastline has not been spoilt. In fact, during the year 1999 and 2000, 35 beaches in Croatia were awarded the Blue Flag which is a symbol of preserved, safe and pleasant environment for fun, relaxation and recreation.

On the other hand, amount of the 419 hotels in the country only 34 are in four-or five- star category, and only one-third conform to international industry standards. So, tourism development in Croatia will require the construction of new, higher-quality facilities, which has begun to happen in recent years.

CHAPTER 3. THE MARKETING RESEARCH ON THE DEVELOPMENT OF TOURISM IN MEDITERRANEAN REGION

According to the quick survey conducted among the participating countries of the Philoxenia Exhibition held in Thessaloniki this year, expectations considering the development of tourism in Mediterranean countries are highly promising.

In a short questionnaire a sample of selected tourism experts from public institutions were asked to outline main trends in their countries’ tourism industry development, to evaluate their countries’ competitiveness to other Mediterranean destinations and to outline prospects for coming years. Of the ten countries’ representatives responded everyone evaluated the development of tourism as highly progressive with constant increasing of tourist arrivals. The details on this survey are attached below (see table 1).

Another interesting fact according to the questionnaire is that almost everyone out of ten respondents recognized the fact that their countries can suffer from increasing competition in the face of other Mediterranean destinations. However, some respondents denied the fact of competition stating that their country can offer types of services that are completely differ from other destinations. In general, destination organizations are extremely optimistic concerning the tourism industry development and most of them are confident enough to state that their countries offer a greater variety of alternative services than other Mediterranean destinations.

Also we should mention the fact that tourism in those countries and especially in newly developed destinations is mostly oriented towards the middle-class consumers. This is regarding only European & American tourists, because tourists from the Eastern and Central European countries are usually upper class representatives. However, the traditional destinations according to the survey have more facilities for upper class representatives, whereas countries like Croatia and Bulgaria are in the process of development of those facilities, which means that newly-developed destinations are in high dependency on middle and low income tourists.

CONCLUSION

Based on the literature research and supplementary interviews with representatives of tourism industry, the following conclusions can be made:

The present competitiveness of the tourism sector is mainly based on a price competition.
Newly developed destinations should elaborate an appropriate marketing strategy for prosperous and sustainable tourism development in accordance with the existing international standards.
New investments to extend the range of the tourism product, especially in newly developed destinations should be made; there is also a need for re-investment in existing facilities especially in traditional tourism-oriented countries.
More attention should be paid to develop better understanding of market trends and current customers’ requirements in order to attract them. The marketing strategy of Mediterranean destinations should be enhanced in order to offer and promote a greater mix of tourist products and develop different forms of tourism.
Also the cooperation between public and private organizations and with direct business partners such as tour operators, airlines, etc. should be maintained in some destinations. It will result in tourist services improving and will attract more and more customers.

REFERENCES

Greek National Tourism Organization (2003) Newsletter No.29 [online]. Available from:

http://www.gnto.gr/3/08/0802/ec80200.html. [Accessed 8th November 2003].

Economist Intelligence Unit. (2003) Croatia: Business: Industry Overview. Tourism [online]. Available from:

htpp://www.viewswire.com/index.asp?layout=display_article&doc_id=273555. [Accessed 5th November 2003]

Economist Intelligence Unit. (2003) Greece: Country Outlook [online]. Available from:

htpp://www.viewswire.com/index.asp?layout=display_print&doc_id=294543. [Accessed 7th November].

Morrison, Alastair (2002). Hospitality And Travel Marketing. Third Edition. Albany, NY. Delmar Inc.

Smid, Siemon and Loewendahl-Ertugal, Ebru (2002) Tourism on Turkey [online]. Available from:

http://www.europa.eu.int/comm/enterprise/enlargement/doc/tourkey-tourism

Spain National Tourism Board (2003) Take a City Break [online]. Spain National Tourism Board. Available from:

http://www.spain.info/Portal/ES/Default.htm. [Accessed 1th November 2003].

United Bulgarian Bank (2003) Business Analyses. Trends in Tourist Industry Development 1(1) Sofia, United Bulgarian Bank

World Tourism Organization (2003) WTO World Tourism Barometer 1(1) [online]. Available from:

http://www.world-tourism.org/newsroom/Releases/2003/june/barometer.htm. [Accessed 17 November 2003].

Mediterranean destinations: Is there a competition?