The Competitiveness of the European Union Tourism Industry

Background

Dube et al (2001) state that what distinguishes the most successful firms is their ability to exceed their fare market share by engaging in a relentlessness search for what Porter has called operational effectiveness. He defined this as the ability to deliver ‘more value’ to the customers (competitive effectiveness) and to produce that value at a lower cost (operational efficiency). The process is dynamic and requires an accurate awareness of customer needs and industry practices. The industry’s intense competition demands greater concentration on capital to enable a company to achieve market dominance. Another related factor that promotes constant improvement in the tourism and hospitality industry involves the realities of today’s stock market. Since so many hotel chains are publicliy traded, companies to show continual improvement in financial performance, hotel chains must find ways to compete more effectively.

Many writers agree that services marketing is different and usually more difficult to manage than product marketing due to the four distinct features of services: intangibility, variability, inseparability of provision and consumption and perishability.

There are three distinctive characteristics of the tourism and hospitality industry: intricate relationship between corporate and property-level operations and management in the industry, the experiental nature of the product and the presence of the customer at the core of service process (Dube et al, 2001). They also state that customers’ evaluation of a hotel and their decision to patronize it depend less on what services are provided but rather more on how the firm goes about delivering on the many aspects of the service being purchased. That is organization and operation of the staff, the information systems, the facility configuration, the hotel environment and other resources are all part of the product the customer is purchasing and each is important to customer satisfaction and retention.

Service quality has been increasingly identified as a key factor in differentiating service products and building a competitive advantage in tourism (Hudson and Miller, 2004).

Quality in tourism-related services, like services in general, is basically about balancing customer perceptions and expectations. Consumer’s attitudes or judgements resulting from comparisons by consumers of expectations of service with their perceptions of actual service performance (Lewis and Booms, 1983; Mackay and Crompton, 1990; Bhat, 2012).

Tourism cuts across many activities: services to tourists include hotels and other accommodation, gastronomy (for example, restaurants or cafes), transport operators and a wide range of cultural and recreational facilities (for example, theatres, museums, leisure parks or swimming pools). In many regions geared to tourism, retail and other services sectors also benefit considerably from the additional demand generated by tourists. Additionally, service quality is also a way of thinking about how to satisfy customers so that they hold positive attitudes toward the service they have received (Ostrowski et al., 1993).