Smart Destination Management

David Beirman

Dr David Beirman Ph.D
University of Technology Sydney

Smart Destination Management – Diversify Source Markets

From childhood, most of us are taught to make sure we don’t have all our eggs in one basket. Or to put it more plainly, make sure you give yourselves options in life. Many tourism destinations have a high level of reliance on specific source markets. SW Pacific island destinations such as Fiji, Vanuatu and Samoa rely on Australia and New Zealand for around 80% of their inbound tourism. The United States has a high level of reliance of tourism from its neighbours Canada and Mexico. Until recently, Germans accounted for 20% of international tourist arrival to Turkey. In 2017, 25% of the 37 million international tourism arrivals to Thailand were from China.

In many cases, a high proportion of tourist arrivals to a destination is a product of geography. France shares land borders with Belgium, Luxemburg Germany, Switzerland, Italy and Spain and a virtual land border (via the Channel tunnel) with the UK. Not surprisingly, the majority of the 85 million + international tourists which make France the most visited country on earth, originate from its neighbouring countries, several of which are major tourism generating countries.

Destinations shoud prioritise their source markets. However, just as destination marketing boards like to see tourists dispersing when visiting a destination its ideal to aim for a a diversity of source markets. Over-dependence on one, or few dominant source markets presents an inherent risk and vulnerability. In 2015, when Turkey experienced acts of terrorism targeting German tourists, the number of German tourists to Turkey in that year plummeted by 80%. In the same year a terrorist attack in Tunisia in which most of the victimes were British, led to a virtual abandonment of Tunisia by British tourists. It is fair to say that terrorist attacks tend to sow far greater fear among tourists than natural disasters or fatal accidents.

There is no doubt that the Tourism Authority of Thailand is actively reassuring Chinese travellers that Thailand is safe, in the wake of the recent tourist ferry disaster off Phuket. Most of the 41 people who died were Chinese tourists. While tourism professionals understand that transport related disasters do not reflect on the overall safety of a destination, the beast of perception operates under a different and often irrational set of rules.

Over the past few years, Thailand has developed a high level of dependence on the Chinese market which represents over 9 million of Thailand’s 37 million inbound tourist market. I am not suggesting at all that Chinese will stop travelling to Thailand as a result of last week’s tragic incident. I appreciate that Thailand’s impressive record in tourism resilience will serve to quickly restore confidence among Chinese travellers. However, it should serve as a wake up call to Thai tourism officials and to destination marketers around the world that over-dependence on a single source market comes with inherent dangers that a dominant source market is not guaranteed for life.

The greater the diversity of a destination’s source market, the less pain is caused if a source market drops out for any one of a variery of reasons. Market fluctuations between a source market and a destination arise for reasons other than crisis event. There could be economic reasons (GFC), competitive reasons (price and perceived value) or even fads (destination X is cooler than destination Y). The golden rule in managing a destination is that source market diversity equals strength.

 

Source = Dr David Beirman

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