Tourism Destination Benchmarking Analysis

Introduction

The problem of this research is related to one of the main methods for adapting the business to constant changes-, benchmarking. Application of this method provides possibility to improve the business process and the quality of products and services, increase creativity within the organization and reduce costs, open new business opportunities and increase profits. All of this is based on comparisons of company’s own products with the competitive products and processes, through the processes of learning and emulation.

The subject of our research is to emphasize the importance of the development of benchmarking, especially benchmarking of competitive type, as well as the process of its implementation. Benchmarking, due to relatively simple implementation, is increasingly used in both profit and non-profit organizations. It is applicable in many fields regarding any type of product and service, without any national or business boundaries.

Application of benchmarking it the field of tourism is presented in this paper. Quality is particular important in the sector of tourism and it is serious survival factor in competitive market. Achieving quality in tourism involves constant monitoring of market trends. At the same time, a tourist destination represents an increasingly important factor of the tourist experience. Tourist’s perception and valuation of the touristic offers trigger tourism competitiveness.

For the purpose of benchmarking of a tourist destination, in the example of Zagreb, is used competitive benchmarking to compare destination offers of city Zagreb to two very popular European tourist destinations (Paris and Vienna). Having in mind that this is a city tourist destination which is in the process of restructuring and repositioning of its urban structure, the aim of the analysis of best practices is to determine the key success factors of the best European city destinations and models of management and marketing through which they took leading roles.

In theory (cognitive) research goal involves the study of relevant literature in order to reach knowledge about the concept and importance of benchmarking, especially the competitive type, its phases and process of its implementation, with particular focus to its application in tourism.

Practical (applied) research goal is to demonstrate the process and the importance of the application of benchmarking of competitive type using the example of benchmarking tourist destination.

General hypothesis of this study is:

The continuous process of benchmarking enables businesses to identify what they need to survive in the market and to create a competitive advantage.

Specific hypotheses:

• Benchmarking allows learning from the best organizations in function to its own improvement.

• The result of the analysis of best practices city destinations indicates the direction in which the observed destination should go, applying in creative way already successful and proven models of marketing and management of urban destinations.

On the basis of general hypotheses, identification of elements necessary to survive and create competitive advantage on the market is determined as a dependent and application process of benchmarking as an independent variable.

The research plan includes the following elements: the research literature and other sources in order to find the necessary information and data, statistical and mathematical processing of the obtained data, graphical representation and comparison analysis, verification of hypotheses and synthesis of the results. Sources of data are divided into primary and secondary and include scientific and professional books, scientific journal articles and Internet.

In the process of research, formulation and presentation of this work are used alone and in combination methods of scientific research, such as historical method, observation, methods of analysis and synthesis, method of comparison, inductive and deductive method, classification and description method and statistical methods.

Overview of Literature and Theoretical Basis

A large number of authors examine benchmarking and possibilities of its application. Some of them are mentioned in the following text. The study of the concept of "benchmarking" in economic terms began after World War II (Renko, Delic and Skrtic, 1999; Ferisak, 1998), but in a modern context in 1979, after the application in Xerox (Finch & Massheder, 1998). Some authors point out that benchmarking is continuous renewed process since it implies constant improving the performance related to competition (Munro-Faure, 1992). Camp (1989) and Mittelstaedt (1992) recognized the benefits of the application of benchmarking in the area of identification the demands of consumers, establishing effective goals, developing proper productivity indicators, improve competitiveness and the implementation of best business processes. According to Kozak and Rimmington (1998), benchmarking plays an important role in determining the best way to increase customer satisfaction, collecting innovative ideas, assessing their own strengths and weaknesses, as well as in undertaking activities in order to provide continuous process improvement business.

. The Definition of Benchmarking

Benchmarking is defined in different ways. It could be presented as following:

• constant process of evaluation of products, services or business organization, recognized as an example of best practice, to improve own organization (Spendolini, 1992),

• ability to see how and why some individuals or companies are outperforming others (Kotler, 1994),

• measuring its own results in relation to others and learning from others, usually direct competitors (Ferisak, 1998),

• systematic procedure of comparative measurements, in order to achieve continuous improvement (Woher, 2002),

• technique or tool to improve performance and to establish a quality process aimed towards the best (Fong, Cheng & Ho, 1995),

• an effective tool in planning and implementing business process changes that lead to improving organizational behavior, where knowledge is converted into a detailed plan of action to improve the competitive advantages (Voss, Ahlstrom & Blackmon, 1997).

Common characteristic of previous definitions are:

• benchmarking is a continuous process,

• benchmarking involves measurement,

• benchmarking can be applied to all aspects of the business (products, services and practices),

• benchmarking is focused on companies recognized as industry leaders,

• benchmarking focus is on practices,

• benchmarking is not a mechanism for determining the resources which have to be reduced,

• benchmarking is a process of discovery and learning experience,

• benchmarking is not a program,

• benchmarking is not a fad,

• benchmarking is a new way of doing business.

. Types of Benchmarking

There are different types of benchmarking, depending on the choice of standard, or whether the standard is found in own organization (company) or beyond. Therefore, benchmarking can be internal or external.

The most common classification of benchmarking is onto:

• internal,

• competitive,

• functional and

• generic.

Since the goal of this paper is to review the implementation of competitive benchmarking, it will be explain in more detail this type of benchmarking. As the example processed benchmarking urban destinations in the neighboring country, where the comparison is done with the best practice in the wider international context, which, given the elusive advantages, can not be considered direct competitors, but considering certain characteristics of the destination, there is dilemma between of competitive and functional benchmarking due to different approaches to the definition of certain types of benchmarking. However, the focus is on competitive benchmarking.

1.2.1. Competitive Benchmarking

Competitive (external) benchmarking involves comparing the observed activities of the company with direct competitors to obtain significant information and data on business of competition. In this way, it allows companies more adequate and successful positioning of its own products, services and overall business compared to the direct competition. One of the major disadvantages of this type of benchmarking is related to possibility to obtain relevant and reliable information concerning their own technology business. Also one of the difficilities concerns the fact that some information are not not publicly available such as number of employees, balance sheet and income statement and so on. In order to inform and understand the business of competition often are used data obtained from secondary sources. Most often data are gathered based on conducted marketing research of consumers, suppliers and sellers. Also, variety of experiences and statements of stakeholders can be used for generating an impression on the operations of the observed enterprise. Comparative analysis can be made based on various performances such as accuracy, reliability, frequency, security, price transparency and etc. The degree of consumer’ satisfaction is directly related to the scope, structure, price and quality of service.

Purchase of competitive products and services for their further detailed analysis in order to identify the competitive advantage is one of the approaches of competitive benchmarking. This approach is significantly present in the automobile industry, where a multitude of manufacturers buying competitive products due to their decomposition to the smallest parts. Then, individually, they perform a comparison of the appearance and functioning of technical systems.

The external (competitive) benchmarking involves comparison with direct competitors either from the point of products, services or entire business. Comparing the company to the leading company in the respective industry who is not direct competitor to observed company is called sectoral benchmarking. If at the same time are used aggregated data for the entire sector, then this is a generic benchmarking. This process can be focused on a particular function or a particular segment of business. "Best practice" benchmarking includes the company of a national economy where it is compared identical business processes in various sectors of business. Comparison is done between companies that have been identified as the best in the chosen segment of commercial activities. Some authors (Fong & Cheng Ho, 1998) speak about a global benchmarking referring to the comparison with the company regardless the geographic distance. In the paper is distinguished benchmarking based on the process and benchmarking based on the results, depending on whether the focus of comparing is into improving business process or final business results. Benchmarking based on a process defines the use of qualitative indicators unlike benchmarking based on the results. It is recommended to implement this method in both directions, in order to strengthen the competitive position of companies. Previously mentioned authors differ benchmarking of process, function and performance. This means that they compare operating systems, business functions and outputs of companies.

. The Phases of the Benchmarking Process

The process occurring benchmarking is the focus of interest of many authors who are just doing research of benchmarking as a modern instrument of business. There are different views regarding the phase of the process of benchmarking. For example, the company Motorola alleges the five stages of benchmarking, AT&T's nine stages, and Xerox ten stages of the process of benchmarking (Osmanagic-Bedenik & Ivezic, 2006). The same authors have decided to display the following four basic stages in the process of benchmarking:

• defining of the problem and collecting the necessary data,

• analysis of data,

• making a decision on the best solution,

• implementation of solutions

The above phases make up the so-called. benchmarking circle. Within it, each said phase contains a number of sub- phases, or individual tasks that enable the implementation of each phase. The first phase of benchmarking circle represents the identification of a problem and its formulation. The last phase is the implementation, or the application of the adopted solutions.

Figure 1. Benchmarking circle (Osmanagic-Bedenik & Ivezic, 2006)

A large number of authors agree that the first phase of benchmarking - problem definition and the collection of necessary data represent the most complex phase of benchmarking. It includes the following sub-phases:

• analysis of its own processes,

• formation of benchmarking team,

• choice of benchmarking partner and data collection.

Analysis of own process gives the answer to the question what is compared by using the process of benchmarking. By conducting this analysis, it can be identified a process, product or service which are crucial for the successful functioning of the company or represent its problem areas. Within these sub-phases it is presented a flow chart of the process, feedback from consumers, the metering process and procedures work.

Many authors believe that the formation of benchmarking team is sub-phase, although there is a significant number of authors who treat it as a completely autonomous phase, with emphasis on its importance for the success of the entire process. This sub-phase depends on the following factors: the objectives of the process of benchmarking, available resources, company size, dislocation of certain parts of the company and so on. Number of team members is in the range from three to eight. Size of the team is directly linked to the size of the company, scope of the research and available resources.

The selection of benchmarking partners and data collection is done using information that the company usually collects using data and information from national and international literature, the internet, from domestic and foreign professional companies, expert consultants, major suppliers, customers, conferences and trade fairs from companies that encourage the benchmarking. After the selection of potential partners, realization of cooperation is beginning, where there is no complete certainty that the chosen benchmarking partner will be ready for cooperation.

The next phase of the process of benchmarking is the analysis of the collected data. The main purpose of this phase is to detect deviations of their own practice and causes of deviation from the best practices benchmarking partners. In this phase, we have the following sub-phases:

• systematization, standardization and data processing,

• determining of deviations and defining the causes deviations.

Systematization, standardization and processing of the collected data is important due to differences in environment, market position, legal regulations and the size of the company which implements the process of benchmarking and benchmarking partner. The objective of sub-phases of identifying deviations and defining deviations cause is affirmation procedures benchmarking partner which allows it to be better than others.

The third phase of the benchmarking circle is the decision on the best solution. Based on the collected data in the previous phase of benchmarking, it adopts a decision on the future activities that should contribute to achieving the objectives of the process of benchmarking. In this phase it is determined implementation plan on rule of ordering the sequence of activities, the inclusion of the necessary financial and non-financial resources and analysis of costs, benefits and risks of using the of the solutions adopted. Company management brings the final decision on the application of the adopted solutions using the results of the benchmarking team and an implementation plan.

The last phase of the process of benchmarking, which also ends that process, is the phase of implementation of solutions, which is still known as the phase of implementation, adaptation or action. This phase implies the introduction of changes by the implementation of the results of benchmarking, process control and monitoring and control of achieved results. The crucial importance for success of an enterprise is reflected in the continuous improvement of business practices in compared to the competition which points to the need for continuity of the process of benchmarking in which phase implementation of solutions represents at the same time end of one and the beginning of the next or a new process of benchmarking.

Benchmarking in Tourism

In tourism, the benchmarking is alllied in the following areas (Stokovic, 2003):

• profit-oriented entities (accommodation, restaurants, tour operators and travel agents, airlines and other profit- oriented providers of tourist services),

• a non-profit-oriented tourism organizations (national or regional tourist boards, offices, supporting facilities of tourism organized on non-profit basis (museums, galleries, theaters, opera, etc.),

• analysis of the destinations (country, region, city).

• Since it is the service sector, qualitative indicators refer to guest satisfaction, which largely has a subjective character. Regardless of the scope of benchmarking in tourism, one can point out the following indicators (Woher, 2002):

• the growth of demand (indicator: the growth rate of the number of overnight stays and the number of tourist arrivals),

• capacity utilization (indicator: the rate of occupancy),

• competitiveness (indicator: the market share),

• internationality (indicator: the share of overnight stays of foreign tourists),

• the duration of the season (indicator: monthly statistics overnights),

• types of guests (indicator: the structure of guests by countries arrivals).

Comparing destinations and tourism organizations as a whole with the competition, in order to improve the methods, products and services, is carried out by applying an external benchmarking.

The Quality of Tourist Destinations

The quality of a tourist destination is consisted of a large number of elements. According to Avelini (2002), these items include:

• destination image and information obtained before coming,

• reservations and place of residence,

• trip to the destination,

• reception on arrival,

• information about the destination,

• attractions and the attractiveness,

• infrastructure and environment,

• farewell at departure and on return journey,

• eating place,

• contacts and memories upon return.

It should be noted that a tourist destination is determined by its business model so that it is not treated as a competition destinations with similar characteristics, but destinations that have the same model. This is why it is extremely important to assess the business model and its way of functioning for a certain destination. Elements to be estimated with goal of making a strategy of long-term sustainability in the market relate to:

• selection of target markets,

• attracting new markets,

• production costs and selling prices,

• the creation of value chain,

• production values,

• relationship of human resources and the guests,

• organization, management and operation of destination.

Empirical Study

Benchmarking analysis of Zagreb as a tourist destination has the task, through the examples of best European city destinations, to show the direction in which Zagreb should make a step forward to improve its competitive position and long term sustainability in the market. The entire analysis is focused on the creation of adequate models to solve the problem of managing and of marketing.

Problem Defining and Collecting the Necessary Data

In the first phase of benchmarking process it is analyzed its own process, elected benchmarking partner and collected information about him.

Internal analysis of the tourism potential of the city of Zagreb shows that there is space for advancement of tourist offer in the area of infrastructure (congress centers, etc.), a stronger orientation of tourist services to foreign tourists, through the promotion of cultural and other events and their adjustment to the interest of foreign tourists, improving accommodation structures (increasing number of "branded" hotels) and continuous cooperation of tourist offer public and private sectors.

The results of this analysis are presented in the following table.

Table 1. Summary of internal analysis (The Zagreb Tourist Board, 2011)

External analysis showed that there has been a positive shift in the tourist area of Zagreb in recent years, mostly in hotels, where there has been a strong growth in the segment of the hostel and private accommodation even though there was a decrease in business results hoteliers. Domestic tourists dominated in a one-day meetings and foreign tourists in meetings with overnight. There was a decrease of interest in the Zagreb Fair but also the emergence specialized fairs in unusual places. There was an increase in physical traffic that is not accompanied by improving business results and increased spending guests. The results of this analysis are presented in the following table.

Table 2. Summary of external analyzes (The Zagreb Tourist Board, 2011)

As examples of best practice urban destinations Paris and Vienna have been selected, as a widely known and popular world travel destinations. The selection of best practices includes the same elements as in the analysis of competition. The difference is that in the focus of best practices analysis are models to solve the problem of managing and marketing of destination.

Table 3. Overview of the general characteristics of best practices (Paris Tourism Research Department, 2012; The Vienna Tourist Board, 2012)

Analysis of of the Collected Data

Analysis of the process of development destination focuses on qualitative elements which can be divided into three parts:

• key success factors,

• innovation,

• operating activities.

The key success factors destinations include:

• A clear vision of tourism development - Observed cities in 80s of last century realized the importance of strategic planning and tourism and in the next twenty years have become what they are today.

• Availability - In the late 80s these destinations are coordinating their vision for the development of cities as transport and business centers with a vision of tourism development and began the modernization and expansion of air transport, which continue to this day.

• Focused product development (rapid growth levers) - The process of selecting and developing fast levers of growth (based on the growth of selected sectors) to the level of the center of excellence lasted between 10 and 15 years. In this way, in the short to medium term, attracted a larger number of of tourists and were achieved higher revenues.

• Focus on markets / products - During the 80s the marketing destinations shifted from "brand" destinations to products, primarily centers of excellence, and create a "brand" products, which enabled clearly defined markets for certain products and operational marketing activities adjusted for single market.

Innovations in the process of developing destinations include alignment management mechanism with the dynamic demands of the tourism sector as well as the population of these destinations.

In the observed destinations innovation is reflected in the modernization of the organizational structure, functional adaptation to the needs of guests and investing effort in capacity building of human resources and introduce them to the latest knowledge and technologies. There are departments that deal with forming and analysis of a database of all markets, segments and tourist products. There is a close cooperation with educational and scientific centers. It supports the small and medium entrepreneurship, taking into account that the development activities and services shall be in accordance with operational annual plans. Marketing of destinations aligns with the annual plans of destination. The population of the observed cities has a significant role in their promotion. It experiencing its city as a tourist destination and use of its resources. In this way, residents can evaluate and improve individual elements destinations through constant giving opinions and criticism.

Operational activities in developed destinations such as Paris and Vienna are performed in a simple and efficient way. These activities include:

• monitoring of various reports on trends, continuous analysis of source markets, primary research and use all available databases of guests and many other strategic and operational activities in the management and marketing of destinations,

• monitoring of various events related to tourism and their effect on the macro-economy of the city, which leads to the findings that facilitate the planning and promotion of the following or events,

• actively lobbying industry that involves the systematic and focused lobbying of key entities in the city and to the central levers of the state as a key interest to further improve the general and tourism infrastructure.

. The Decision on the Best Solution

As it is said, the results of the best practice analysis indicate the direction in which the city of Zagreb could make his step forward through creative copying an already successful and proven management models and marketing urban destination. The observed best practices have shown that their development processes of destinations in the past focused only on two to three tourist products that are developed to the level of the center of excellence.

Based on realistic estimates of future private sector investments in the tourism industry and the expected allocation of the public sector for tourism as well as for general infrastructure of the city of Zagreb, it is proposed to focus on two key products business product and culture with events. In doing so, in this paper it is taken into account that they already good operational functioning and that there is an elementary tourist infrastructure so that they will not need to invest capital intensive. Here it is assumed good strategic and operational marketing.

As a second set of products stand out touring and short breaks, which are still in their infancy. A prerequisite for professional breakthrough of these products represents on the one hand the further development of general and tourism infrastructure, and on the other hand create a good marketing and promotional programs.

The third level of products are catering / shopping and special interests that have a role of completing of products of first and second levels, further empowering the primary motive for coming.

. Implementation of Solutions

In order to well managed by tourist destination and its promotion it is necessary to know a lot about the environment as well as a very thorough knowledge of their own situation. In developed destinations operational activities are carried out in a simple and efficient way. In the case of Zagreb, the implementation of the same activity is much harder and less practical. There is also question of the possibility of action existing marketing system.

The operational activities of each of the proposed products must be developed in the interactive workshops with the team of the Zagreb tourist board.

Conclusion

Benchmarking is a continuous search for examples of "best practices". In essence, it is a process of learning and acquiring knowledge with the aim of applying lessons learned to improve own business practices. In this way, by using benchmarking, companies aim to build learning organization, whose competitive advantage represents her ability to learn and to be changing, to learn faster than others, and lessons learned quickly transformed into action.

Choose the type of benchmarking that will be used in certain cases depends on the subject of benchmarking, the research objectives and results to be achieved, the available time and resources, the availability of sources of good examples of practice and experience of researchers in the implementation of this process. As the best practices are constantly changing continuous process benchmarking allows the organization to identify what they need to create competitive advantage.

Through the research presented in this paper it is presented the concept and importance benchmarking, especially the competitive type, as well as its phases in the process of implementation, with particular emphasis on applications in tourism, which was the theoretical research goal. Practical part of the paper presents the process and the importance of the application benchmarking of competitive type using the example benchmarking tourist destination city of Zagreb, which has been achieved and the practical research goal.

Theoretical study of benchmarking and its practical application in the example confirmed the specific hypothesis, namely that:

• process benchmarking allows learning from the best organizations for their own improvement,

• through examples of best practice urban destinations indicates the direction in which the observed destination should make a step forward, applying creatively already successful and proven management models and marketing urban destinations.

On the basis of confirmed special hypothesis can be stated that general hypothesis which states that: "The continuous process benchmarking allows a company to identify what it needs to survive in the market and to create a competitive advantage", is confirmed. The research shows that benchmarking, as a technique of comparative analysis which has an important role in the creation and acquisition of competitive advantage, is one of the most useful management techniques in the context of the strategic as well as operational management.

References