Chapter 17: Governance of partnerships and alliances in tourism businesses and destinations

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1 Collaboration in Tourism Businesses and Destinations: A Handbook Chapter 17: Governance of partnerships and alliances in tourism businesses and destinations Sylvain ZEGHNI Université Paris-Est Marne-la-Vallée (UPEM) - Laboratoire Ville Mobilité Transport (LVMT) Laboratoire commun École des Ponts ParisTech - UPEM - IFSTTAR (UMR T 9402) Address: UPEM, Erasme Building, 6-8 Cours du Danube, Serris, : sylvain.zeghni@u-pem.fr Short biography 63 words Sylvain ZEGHNI s recent research focuses on the development strategy of tourism destination. He is studying the co-operation between tourism actors in the clustering process and the branding strategies of destinations. He is in charge of a Master's degree in tourism studies and a Guide Diploma at the Université Paris-Est Marne-la-Vallée (France). He is an active member of the Cluster Tourisme Paris Val d Europe. Abstract words Purpose: In the context of strong mutation, the tourism industry has to adapt its offer to more sophisticated demand. In the same way destinations have to develop networks, on a wider scale, to satisfy the tourist experience. These shifts generate the necessity to improve the co-operation between destination actors and tourism industry. This co-operation may have different forms such as Public- Private Partnerships, Informal network or Cluster. Design/methodology/approach: The recent literature in network-based destination has developed the concept of destination governance. The destination governance is a coalition of different partners with common interests. In this chapter, we will present the concept of Network-based destination. We will also try to understand how the governance is produced, who governs and what roles have the actors and the institutions. Findings: We will demonstrate that a network-based destination is a self-organization of tourism destinations. Based on the co-operation between different actors (institutions and companies, inhabitants) a network based destination has to develop a governance process. We show that destination governance is a process of collaboration, co-operation and leadership. Consequently, we will show that an efficient governance process requires constant political negotiation, continuous learning, and a business model with high tolerance for trial and error. Social Implications: Since a few years, the development of private-public partnership and clusters in tourism destination management is important. The quest of governance and effectiveness of these partnerships have to be studied to improve efficiency in destination management. Originality/value: Our chapter aims to understand the concept of network-based destination and the role of the governance process. It is an emergent literature in the field of destination management. Category: General Review

2 Keywords: Governance, Network, Destination Introduction The considerable growth of the tourism sector caused many debates among the professionals, the political and institutional decision makers. Tourism is now a world phenomenon and numerous new destinations appear. Tourism is viewed for emerging destinations as a key driver of economic progress and development. In 1950, the first fifteen destinations accounted for 88% of the international tourists arrivals. In 1970, they represented no more than 75% and 55% in According to the UNWTO (2013), in 2030, the share of the emerging nations in world tourism should currently account for 57% of the international arrivals against 30% in In this complex context, destinations have to adopt and improve their strategy to reinforce their position in a more competitive environment (Formica and Kothari 2008; Fabry and Zeghni 2014). Destinations can disappear quickly in particular because of climatic or political event, but also because they does not adapt to the rapid changes of the demand. The competitiveness of a destination is based, beyond its attraction, on the quality of inter-relation between stakeholders. The concept of tourism destination is relatively unclear and differs according to the type of researches. As Framke shows (2002, p.1) «One of the most used words in the field of tourism is destination used in marketing, planning and development, and general research. One can find it in tourist guides, brochures and homepages, and, of course, in all kinds of textbooks and readers in tourism. So it is obvious that one should be suspicious. How can one word contain so many of tourism s aspects? Investigating the use of the word shows various ways of using it. The word has no unique content, its meaning depends on ones purpose, be it describing, communicating or analysing tourism. By taking a geographic perspective one will evidently recognise the differences: destinations can be found static destinations in connection to one s stay at a certain location; and there exist dynamic destinations, where movement is the motive for a vacation; you can find destinations connected to networks and other relations in the industry, and so on. From the supply side view, the destination is the place of the tourist experiment, produced by a whole of complementary actors. These actors can be private or public and interact to make a complex product composed by different goods and services. Nevertheless, Leiper (2000, p. 366) says: «There is no evidence that any destination ever attracted, in a literal sense, any tourists. [...] The main causal factors of tourist flows are not located in destinations but in traveler generating regions, in places where trips begin, where the forces that stimulate tourists motivations are located and where marker systems directing tourists to nuclear elements of attractions begin.» Jafari (2010, p ) defines destination «as distinct from origin or market, refers to the place where tourist intend to spend their time away from home. This geographical unit visited by tourists may be a self-contained centre, a village or a town or a city, a region or an island or a country. Furthermore, a destination maybe a single location, a set of multi-destinations as part of a tour, or even a moving destination such as a cruise.» This last definition is quite simple and Pearce (2014) suggests five major concepts used to analyze and describe destinations: industrial districts, clusters, networks, systems, and social constructs. In this paper, we choose a network perspective. The network analyze permit us to study destination as a complex node of relationship between stakeholder to produce a experience for the tourist. For Pine and Gilmore (1999), the concept of tourist experience consists of the dramatizing of the service or of the product, where the personnel transforms itself into actor, the customers are the guests and the destination becomes the scene. Network analyze also permit to study the quest of destination governance. The quest of network-based destination governance has a crucial importance for a destination. Based on the co-operation between different actors (institutions and companies, inhabitants) a network-based destination has to develop a governance process. As Meriläinen and Lemmertyinen show (2011, p.28)

3 The coordination of cooperation seems to focus on the actor whereas strategic management approaches the action from the perspective of whole network. We show that destination governance is a process of collaboration, co-operation and leadership. Consequently, we will show that an efficient governance process requires constant political negotiation, continuous learning, and a business model with high tolerance for trial and error. In this chapter we will try to understand how the governance is produced, who governs, what roles have the actors and the institutions in the process. Network-based destination and complexity As we have seen, different theories may help us to understand how many stakeholders interact to deliver a real experience to the tourist in a destination. In recent years, social network analysis has pregnant to understand how to manage tourism destinations. These types of theories are useful to study how interaction between different actors may produce knowledge, co-operation and performance. In a tourism destination there are many actors and it is necessary to understand their ties as has shown by Pforr (2001; 2002; 2006). Pforr analyzes the case of the Australian Northern territories. He has measured the intensity of the link between each stakeholder and has shown that the more the intensity and the density of these links are important, the more the performance is high. He has also shown that the dynamic end the efficiency of a network based destination depend on the role of each stakeholder and the type of governance process. The success of a destination and the creation of an efficient value chain depend on the quality of the links between tourism actors (Shih, 2006; Scott et al., 2008). Scott et al. (2008) define a destination as a cluster of interrelated stakeholders embedded in a social network. Actors of this network are industries supporting tourism (accommodation, restaurants, tour operators, travel agencies, attractions, cultural heritage ), Transport infrastructures, commercial services, DMO s, Government agencies, inhabitant. The quality of interaction between these stakeholders may improve or diminish the destination s competitiveness Beritelli et al. 2007; Beritelli 2011). As shown by Baggio et al. (2010, p.51), The interaction of these stakeholders is complex, dynamic, and subject to external shocks. The basic premise of tourism destination management is that through cooperative planning and organisational activities, the effectiveness of these joint interactions can be improved to the benefit of individual stakeholders. As Padurean (2012, p.194) says network-based Destination Governance describes a form of selforganization of tourist destinations, based on the cooperation of the persons and companies involved, and shaped by the institutional context as well as rules of organization and code of conduct Vis-a-vis a demand for rapid and constant evolution, destination have to anticipate and adapt their supply. Beritelli et al (2014) distinguish to type of views about tourism destinations: Table 1 - Traditional view and new paradigm of destination Traditional View Basic construct One area, with rather delimited boundaries, one territory, the area changes as the perspective (cruising altitude) of the organization or the institution changes (hierarchical perspective) Markets Different markets, depending on the segmentation criteria, often aggregated Image, Brand Planning and research implications Actors and institutional involvement One destination image, one destination brand as a rule, above many other product brands One object of management/research with regard to competitiveness, sustainability, life cycle stage For all comprehensive, pertaining the whole territory/area, everybody worries about everything New Paradigm Multiple different, partly overlapping spaces, consisting of dynamic flows One market per given Strategic Business Area, each one rather homogeneous in motivations, activities, and flows Multiple images, multiple Strategic Business Area brands, and a destination brand as the exception Management/research at Strategic Business Area level, Strategic Business Areas with different competitive positions, and at different life cycle stages Public sector with regard to selected projects in the administrative boundaries and with neighboring administrations, private and Private Public Partnership pertaining to the relevant Strategic Business Areas

4 Sources : Beritelli et al. (2014), p.415 In a traditional view of a tourism destination, the geographic area is well defined. Today, most of researches consider destination as a destination a perceptual concept. Tourists may interpret subjectively destination, depending on their travel itinerary, cultural background, and purpose of visit, educational level and past experience. Tourist experience of a destination entirely depends of local producers and suppliers. Destinations have to innovate and to produce specialized goods and services to attract intentional demand. The rapid, changing and complex tourist demand in a worldwide competitive environment needs a flexible specialization of the destination. One of the destinations key drivers to produce a quality experience is to build Private Public Partnerships and to develop a close co-operation between all stakeholders (Nordin & Svensson, 2007; Padurean, 2010). The competitiveness of a tourism destination depends on the competitiveness of each local supplier and inhabitants. Each local stakeholder should co-operate rather than compete to develop the visibility and the legibility of the destination. As Michael (2003) shows, the existence of a tourism network is not sufficient to create synergies between actors. Gnoth (2006) shows that actors have to frequently interact at a formal or informal level. The quest of the quality of interactions between stakeholders of a destination depends of the destination governance (Laws et al., 2011). In tourism management literature, the concept of destination governance plays a major role in the recent years. There is no one definition of this concept and its theoretical foundations are relatively unclear (Buhalis 2000; Raich, 2006; Pechlaner, Raich, & Beritelli, 2010). Moreover, different managerial theories are used as basement of destination governance like stakeholder theory, resources dependence theory or transaction cost theory. For Beritelli et al. (2007, p.96), The concept of governance applied to tourist destinations consists of setting and developing rules and mechanisms for a policy, as well as business strategies, by involving all the institutions and individuals. Tourist destination territories are similar to areas or regions that have firms as their main service suppliers, but they also have political bodies involved, such as municipalities or district governments.» Network governance and knowledge sharing Jones et al. (1997, p. 914) say that, Network governance involves a select, persistent, and structured set of autonomous firms (as well as non-profit agencies) engaged in creating products or services based on implicit and open-ended contracts to adapt to environmental contingencies and to coordinate and safeguard exchanges. These contracts are socially not legally-binding. In the literature about networks, governance is not the main subject because most of the networks are informal and their members are autonomous. Nevertheless, as a range of interaction between members, a network needs to understand how its members could co-operate efficiently and effectively. The quest of network governance is crucial to understand how independent partners interact and optimizes interactions. To study governance network, a first criteria may be used: the nature of the governance. We may distinguish here between external governance and self-governance. In the first case, a separate entity governs the network. In this case, each participant interacts with each other but also with the Network authority. The Network Authority has a dominant role in coordinating and sustaining the network. Even if this Authority is external and independent, it is mandate by members. This Network Authority may be modest in scale, with few people for example just one CEO and an executive board representing members like in the case of the Cluster Tourisme Paris Val-d Europe. Most often, this network authority is a non-profit organization especially if a majority of the network members are private organizations. In the case of self-governance, members of the network participate directly to the coordination of activity. This governance may be formal with regular meeting for example or most informal. So, if we consider the degree of centralization criteria, we may distinguish two extreme forms of network governance: the shared governance and the lead governance. In a case of shared governance, each member interacts with each other to govern the network. This is a highly decentralized form of governance. In a case of lead organization governance, one or few

5 members of the network have a great power. A shared governance depends on the trust level between members and the active commitment of each. In this case it is all the members that make all decisions and manage network activities. This form of governance is efficient if the members, the differences in organizational size, resources capabilities and performance are few. In the case of a network govern by a lead organization, the research of efficiency is dominant. It is particularly the case for the Keiritsu. Generally, this highly centralized form of governance is adopted when a member has a central position in the key resources, client or has a great legitimacy. The leading member takes key decisions and coordinates all activities. The choice of a form of governance network depends on Trust, size of the network, goal consensus and the need for network-level competencies (Provan and Kenis, 2007). The table 2 sum up their conclusion: Table 2: Key predictors of effectiveness of network governance forms Form of governance Trust Size Goal Consensus Need for network level competencies Shared governance High density Few High Low Lead governance Low density, highly centralized Moderate number Moderately low Moderate Network Authority Moderate density, Network Moderate to many High High organization administrative organization monitored by members Sources : Provan & Kenis, 2007 p. 237 According to Provan & Kenis (2007, p.237) «as trust becomes less densely distributed throughout the network, as the number of participants gets larger, as network goal consensus declines, and as the need for network-level competencies increases, brokered forms of network governance, like lead organization and Network Authority Organization, are likely to become more effective than sharedgovernance networks. Whatever the form of governance, the success is not guaranteed and some contradictions may be existing in the network. The literature identifies three contradictions: efficiency process of decision vs. inclusive process of decision; internal legitimacy of network vs. external legitimacy; flexibility vs. stability. In the first case the efficiency may needs more centralized decision process and neglects the necessity to include all members. In the second case the conflict between internal and external legitimacy depends on the form of governance: in a shared-governance network, the legitimacy is mainly internal but in a lead-governance network legitimacy is mainly external. Finally, shared governance facilitates flexibility but a lead-governance network is more compatible with stability. Table 3. Conflicts in governance process Shared governance Leaded Governance Network administrative organization Efficiency vs. inclusive Inclusive Efficiency Efficiency External vs. Internal Legitimity Internal External Both internal and external Flexibility vs. stability Flexibility Stability Stability The choice of strong rules should permit the possibility to change them with the use of an adaptative management: a network based destination has not only to adapt to its environment but also to create it. Manage a network based destination in a complex destination needs a governance system but also an efficient information transfer system between members. Gnoth (2006) shows that cooperation in marketing activities and the knowledge sharing about tourists strongly influence a destination s success. As Baggio et al. (2010, p.55) say: Information and knowledge flows in a destination network are relevant determinants of the health of the system. Productivity, innovation and growth are strongly influenced by them, and the way in which the spread occurs affects the speed by which individual actors perform and plan their future. In a destination, the different actors and their relationship system (formal and informal) are an important component to understand how information and knowledge are diffused in the network and to identify the channel of diffusion. In a complex and unpredictable environment, stakeholders of a network have to share their experience and knowledge and to improve the density and the intensity of

6 their links. This is well illustrated by the work of Ingram and Roberts (2000) concerning the diffusion of best practices between the managers of hotels in Sydney. Simulations realized by Baggio and Cooper (2010) show that the speed of information and knowledge diffusion in a network based destination depends on the capacities of actors to acquire and to diffuse them. They also show that higher is the clustering coefficient of the network, higher is the speed of diffusion. Conclusion In the context of global and opened economy, the destination competitiveness becomes an important quest. It is highly necessary to study how relationships between stakeholders in a network are formed and managed and how they evolve. The interactions between stakeholders of the network (accommodation business, tour companies, government agencies, tourism offices, DMOs, etc.) produce an experience that the tourist consumes. The quality of this experience depends on the quality of the interactions in a complex and changing environment. The stakeholders have to determine, implement and evaluate the rules they choose in their governance process. As Beaumont and Dredge (2010, p.9) say The effectiveness of local tourism governance in achieving the goals of its stakeholders depends on the effectiveness of institutional structures and processes, and the relational resources and skill sets available. The choice of a governance mode strongly influences the network effectiveness and the capacity of the network to evolve. The quest of knowledge sharing and transfer is crucial for a necessary adaptative management. Baggio R., Cooper C., (2010). Knowledge transfer in a tourism destination: the effects of a network structure, The Service Industries Journal, Vol. 30 No. 10, pp Baggio R., Scott N., Cooper C., (2010). "Improving tourism destination governance: a complexity science approach", Tourism Review, Vol. 65(4), pp Beaumont N., Dredge D., (2010), Local tourism governance: a comparison of three network approaches, Journal of Sustainable Tourism, Vol. 18 No. 1, pp Beritelli P., (2011). Do Actors Really Agree on Strategic Issues? Applying Consensus Analysis of Stakeholder Perceptions in Tourist Destination Communities. Tourism Analysis, 16 (4): Beritelli P., Bieger T., Laesser C. (2007) Destination governance: using corporate governance theories as a foundation for effective destination management, Journal of Travel Research 2007; 46(1): Beritelli P., Bieger T., Laesser C., (2009). Size Matters! Increasing DMO Effectiveness and Extending Tourism Destination Boundaries. Tourism, 57 (3): Beritelli P., Bieger T., Laesser C., (2014). The New Frontiers of Destination Management: Applying Variable Geometry as a Function-Based Approach Journal of Travel Research, Vol. 53(4): Buhalis D., (2000) Marketing the Competitive Destination of the Future Tourism Management, vol. 21 pp Fabry N., Zeghni S. (2014), Territoire touristique, destination et marque: le cas du Val d Europe, Communication au colloque Communication touristique : stratégies, acteurs, territoires, Université de Bretagne Sud et Université Catholique de l Ouest, Vannes, 3 et 4 avril 2014 Formica S., Khotari T. H., (2008). Strategic destination planning: analyzing the future of tourism, Journal of Travel Research, 46(4):

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