Tomáš Gajdošík, Vanda Maráková

Development of Cooperative Management in Tourism Destination (a case study of the Slovak republic) Rozvoj kooperatívneho manažmentu cieľového miesta cestovného ruchu (prípadová štúdia Slovensko). Tomáš Gajdošík, Vanda Maráková Abstract The relationship between tourism stakeholders in a destination evolves over time and therefore the understanding of cooperative behaviour is influenced by the stage of the destination life cycle. This behaviour is the prerequisite for implementing cooperative destination management, which is seen as a tool for strengthening destination competitiveness and influencing the economic impact of tourism. The aim of the paper is to analyse the dependence between the development stages of cooperative destination management and the economic impacts of tourism in Slovakia and to examine the influence of the destination life cycle on cooperative behaviour in selected destinations. Several statistical methods are used to meet the aim of the paper, such as the Spearman correlation coefficient and hierarchical cluster analysis. We came to the conclusion that there is a strong dependence between the development stage of cooperative management and the economic impacts of tourism and that the level of the destination life cycle influences the cooperative behaviour of stakeholders in the destination. Keywords: Cooperation, Destination, Life-cycle, Management, Stakeholder JEL classification: M30, L83 1. Introduction The development of destinations and competition in the tourism market means that destinations must be more interested in gaining a competitive advantage that can only be achieved by promoting a common interest through the application of cooperative management. The cooperative management of a destination is one of the factors of competitiveness of a destination on the domestic and international tourism market (UNWTO, 2007; Wang and Krakover, 2008). The concept of cooperative management in countries with developed tourism began in the 1950 s-60 s, when a growing number of visitors led stakeholders in the destination to become aware of the need for cooperation and joint management. They assumed that by working together and creating a uniform product, the destination will increase the number of overnight stays and thus the economic impacts of tourism. In Slovakia we observe the application of cooperative management with the transformation into a market economy in 1989. As in countries with developed tourism, we can identify the different development stages of cooperative management in Slovakia. In the beginning it was through voluntary associations, which was later transformed into tourism clusters and then the consequential destination management organizations. The purpose of this transformation was to reach new markets and increase tourism revenues. When examining the development stages of cooperative destination management we find certain analogy with the concept of the destination life cycle, which says that destinations are evolving since their creation (Butler, 1980, 2006). In domestic and foreign literature different destination life cycle models can be seen. The oldest models include Cohen's model (1972) based on the characteristics of visitors, their motivations and desires which influence the choice of a destination. Plog (1973) distinguished allocentric, mid-centric and psycho-centric visitors who differed from each other by levels of popularity and the discovery of new experiences. The various stages of the

destination life cycle are represented by different types of visitors. An important contribution to the theory of destination life cycle was presented by Buhalis (2000), who assigns a brief description to the each stage of the life cycle that is based on the impacts of tourism. Linking the destination life cycle with cooperative destination management was suggested by Cooper and Jackson (1989), Wang and Fesenmaier (2007) and Beritelli (2011), who added that the level of cooperative management depends on the stage of the destination life cycle, the cultural conditions, the legal and political environment and specifics of a destination. A similar idea of linking the life cycle to a cooperative relationship can be found in Caffyn (2000), which created a cooperative model of the life cycle with six stages. Buhalis (2000) and Maráková (2012) describe the different stages of the life cycle of a destination on the basis of relations of tourism stakeholders (Table 1). Table 1. Life cycle and stakeholder relations in the destination Stage of life cycle Introduction Growth Maturity Saturation Decline Situation Characteristics of relationships between stakeholders New trendy destination Strong competitive relationships, with no sign of joint action Increasing number of visitors and investments Establishment of relations in the private sector, a common approach in promoting destination High traffic, growth of facilities A synergistic effect of cooperation, joint approach to planning, setting up a management organization Oversupply, shifting demand Relationship between private and public sector often legislatively regulated Source: Prepared according to Buhalis, 2000 and Maráková, 2012. Demand reduction, special offers to induce recovery In the initial stages of the destination life cycle, the level of cooperation between the stakeholders involved in the development of tourism is weak. When the stage of maturity is reached, the destinations experience a synergic effect of cooperation between the stakeholders, which creates conditions for the establishment of a destination management organization. Morrison (2013) adds that there is a change in relationships between the stakeholders and the destination management organization, especially in terms of trust, transparency and leadership which are the elements of destination governance. Beritelli (2011) adds that the conception of destination governance proposes a model for effective management and planning in the destination based on mutual trust. However, in foreign publications, the observed combining of destination life cycle approach and cooperative destination management is mostly at theoretical basis, often without the backing empirical research. We have therefore decided to examine the impact of development stage of cooperative management and the economic impacts of tourism and how the destination life cycle affects the relationships between destination stakeholders in Slovakia. This is a new perspective in destination management in response to the specificities of destination in various stages of the life cycle and the results of the survey will serve not only for the right marketing decisions on the level of destinations, but also for decision-makers, which should encourage the cooperative management. 2. Aim, material and methodology The aim of this paper is to determine the relationship between the development stage of cooperative destination management and the economic impacts of tourism in Slovakia and examine the impact of the life cycle with regards to the relationship of stakeholders in Slovak destinations. The obtained material was derived from primary and secondary sources. The primary collection was carried out by method of sociological interview in two destinations, located at different stages of the life cycle. We approached a total of 380 subjects involved in the development of tourism in the destination and responses were received from 71 stakeholders, representing a rate of return on the questionnaire of 18.7%. This was not limited to members of destination management organization as it

also included tourism businesses which are interested in its development (accommodation and catering facilities, touroperators, municipalities, tourism associations, operators of sports facilities, transport companies, cultural facilities, etc.). Secondary data necessary for determining the relationship between the development stage of cooperative destination management and the economic impacts of tourism in Slovakia were obtained from the Tourism Satellite Account produced by the World Travel and Tourism Council (WTTC). Data were obtained on the economic impacts of tourism direct contribution of tourism on GDP, visitor exports and domestic spending on tourism. Data needed for classifying the destinations into the stages of the life cycle were derived from different sources according to the system of quantitative and qualitative indicators. These indicators were addressed in a theoretical basis by Buhalis (2000), Gúčik (2010) or Pĕč (2012). Based on a synthesis of their views we have chosen the following variables: financial subsidy for the destination, number of overnight stays in the destination, occupancy rate in the destination, infrastructure the number of beds in the destination, attractiveness of the destination. Data concerning financial subsidies for destination management organization was obtained from the Ministry of Transport, Construction and Regional Development. Regional statistics was used to obtain information on the number of overnight stays, occupancy rate and the number of beds as an indicator of infrastructure in the destination. The attractiveness of the destinations was determined by Regionalisation of Tourism in Slovakia. The obtained data were processed using selected mathematical and statistical methods. The relationship between development stage of cooperative management and economic effects of tourism in Slovakia was measured by the Spearman correlation coefficient. Destinations in Slovakia were classified into different stages of destination life cycle by a hierarchical cluster analysis, which is used to investigate the development of destinations, which are at a similar stage of development. The objective of the cluster analysis, through a suitable distribution, is to select objects that reside in different clusters that are similar but at the same time have a varied level of difference. For comparability of the data we used the standardization with standard deviation. 3. Results and discussions The application of cooperative destinations management in Slovakia is only in its infancy as compared to the destinations in the countries with developed tourism. To increase the competitiveness of Slovak destinations, it is necessary to examine how cooperative management affects the economic impacts of tourism while, at the same time, the stage of the life cycle affects the level of cooperation in the destination. This issue is very up to date in Slovakia. The adoption of Act 91/2010 Coll. on the promotion of tourism, legislatively adjusted cooperation of destination stakeholders at the local, regional and national level. It created a cooperative environment for application of destination management. 3.1. Development stages of cooperative management in Slovakia After transformation of the Slovak economy to a market economy, there have been gradually increasing efforts to create institutional and financial funding for regional tourism. The first local and regional tourism associations were established in 1989. With the partnership principle, the actors strived for coordinated development of tourism, but often without systematic support from public funds. Building the cooperative destination management continued after 2001, with the transfer of certain powers from state administration to the local self-government. Strong local and regional tourism associations continued to implement its activities. Since 2008, tourism clusters began to develop. Unlike tourism associations, their objective was the development and competitiveness of

destination stakeholders, cooperation with research institutions and marketing the destinations. In 2012, Slovakia enacted Act 91/2010 Coll., a law intended to promote tourism, which should systematically address the cooperative management and marketing of destinations. Destination management organizations are seeking to build destination brand and booking system, which is still in its infancy. This stage focuses mainly on product creation and their subsequent marketing communication. The dependence between the development stage of cooperative destination management and the economic impacts of tourism in Slovakia can be seen in figure 1. Figure 1. Dependence between the development stage of cooperative destination management and the economic impacts of tourism 3.00 % 2.50 % 2.00 % 1.50 % 1.00 % 0.50 % 0.00 % Direct contribution to GDP Visitor exports Domestic spending on tourism Source: Prepared according to WTTC, 2014. From the graph, it can be seen that with the increasing level of cooperative management in Slovakia also comes an increase in the economic impacts of tourism. Depending on the precise expression, Spearman's correlation coefficient was used. The importance of change in the development stage of the cooperative management on the changes in the economic effects of tourism was identified using linear regression (Table 2). Table 2. The relationship between the development stage of cooperative destination management and the economic impacts of tourism Economic impacts of tourism Spearman's correlation coefficient Significance R 2 Direct contribution of tourism to GDP 0.925 0.000 0.817 Visitor exports 0.846 0.000 0.725 Domestic spending on tourism 0.936 0.000 0.861 Source: Own conception, 2014. On the basis of the R 2 calculations, we observe that the development stage of cooperative management explains from 81.7 % to 72.5 % of the changes in the economic effects of tourism in Slovakia. It is therefore a significant factor concerning the economic impacts of tourism in the state. Based on the significance equalling 0.00, it can be argued that between the development stage of cooperative management and economic effects of tourism there is a dependency. Spearman's correlation coefficient, which is within a range of 0.936 to 0.846, determines this dependency to be direct and strong. Because cooperative management has such an effect on the economic impacts of tourism in the state, it is an important factor in tourism development. We confirmed the assumption that with the increasing level of cooperative management there comes a growth also in the economic impacts of tourism.

3.2. The destination life cycle of and its effect on cooperative management To meet the stated aim of the article, the impact of the destination life cycle stage on the relationship of stakeholders in Slovak destinations was also examined. An examination of all destinations in Slovakia, which operates a destination management organization, was undertaken. This totals 32 destinations at the level of tourism resorts and regions (Annex 1). Using hierarchical cluster analysis, we classified these destinations into three clusters. According to the characteristics of the different stages of the destination life cycle, these destinations were classified into introduction, growth and maturity stage (fig 2). The High Tatras, Bratislava and Liptov are destinations that are in the maturity stage. These are the most attractive destinations in Slovakia, with the largest number of overnight stays and tourism infrastructure, having sufficient financial instruments for tourism development. The other destinations, due to the lower number of overnight stays, attractiveness, infrastructure and funding are in the growth and introduction stage. Most destinations are in the growth stage where we see the beginnings of the creation of a common destination product and its marketing communication is directed towards the domestic market. Low financial instruments for tourism development and lower attractiveness meant that these destinations do not have sufficient resources for comprehensive management and marketing. Stage of the life cycle INTRODUCTION TO THE MARKET Figure 2. Life cycle of Slovak Destinations GROWTH North Zemplín & Šariš Novohrad Gron Záhorie Orava Zemplín Northern Považie Žitný Ostrov Banská Štiavnica Dudince Spiš Kysuce Senec Turiec Kremnicko Nitra Trnava Northern Nitra - Bojnice Slovak paradise Low Tatras Tatry -Spiš-Pieniny Šariš Bardejov Northern Spiš - Pieniny High Tatras surroundings Central Slovakia Trenčianske Teplice Rajecká valley Košice Malá Fatra Pieštany MATURITY Liptov Bratislava High Tatras 0 5 10 15 20 25 30Destination 35 Source: Own conception, 2014. In order to determine the impact of the life cycle on the level of cooperation in the destination we have chosen two destinations that are in different stages of the life cycle the Liptov region and Central Slovakia. In these destinations, we examined the level of cooperation of tourism stakeholders. The results are presented in figure 3.

Figure 3- Level of cooperation in the destinations Liptov and Central Slovakia Cultural facilities Transport companies Operators of sport facilities Educational institutions 4 DMO Hotels 3 2 1 0 Guest houses Private accomodation Catering facilities Liptov Central Slovakia Regional agencies Tourism associations Municipalities Touroperators Information offices Source: Own conception, 2014 From the figure it is clear that the level of cooperation is higher in Liptov than in Central Slovakia. This is confirmed by the content-size charts (spider chart) in both destinations. The highest difference is seen in the level of cooperation with the destination management organization (DMO) and tourism associations. This is based, according to the interviews, on lack of confidence and fear of information leakage. Stakeholders in the destination in Central Slovakia do not understand the benefits of cooperation such as the creation of a complex product, reaching new markets of visitors, or reducing the marketing costs. When creating complex destination product, it is also necessary to cooperate with the accommodation facilities, operators of sports facilities, and tourist information offices. The level of cooperation with these stakeholders is significantly lower in Central Slovakia than in Liptov. In the survey, we also focused on the relationship of stakeholders to destination management organization in terms of trust, transparency, and leadership. The aim of the interviews was to determine whether subjects perceive any cooperation in the destination and whether or not it is viewed positively. The stakeholders could express their opinions on seven statements characterizing the destination governance on a scale from -2 to 2. The higher value increases the level of agreement with the statement. Table 3 presents the average values of destination governance in examined destinations. Table 3. Destination governance in destinations Liptov and Central Slovakia Statements concerning destination governance Liptov Region Central Slovakia In the destination, there is cooperation between the public and private sector. 0.31 0.00 In the destination, interrelationship between stakeholders of private sector is based on -0.04-0.67 mutual trust. Management and marketing activities of the destination management organization is 0.04-0.53 considered effective and sufficient. My organization is included in the management and marketing activities in the 0.42-0.31 destination. Destination management organization is responsible for the activities and results in the 0.04-0.53 development of tourism in the destination. Management and marketing activities of destination management organization are 0.16-0.19 considered to be transparent. Mutual cooperation in the destination has positive benefits for my organization. 0.73-0.19

Source: Own Conception, 2014 Based on the statements of destination stakeholders in the examined destinations, we see that the relationship between stakeholders and destination management organization in terms of trust, transparency, and leadership is higher in Liptov, which is in terms of the destination life cycle is in the higher stage. The destination management organization has been operating in Liptov for more than six years and has created a competitive product, which motivates stakeholders to work together. In the destination of Central Slovakia we observed a negative relationship, indicating that stakeholders do not trust the destination management organization and do not have a positive attitude towards cooperation in the destination. The reason for this negative relationship is the deficient competency of the destination management organization and the resulting under-performance of its activities. Stakeholders do not see the benefits of cooperation in this destination. 4. Conclusion Cooperative destination management is well discussed topic in the foreign literature and is referred to as a factor for increasing the competitiveness of a destination and increase economic impacts of tourism. With this empirical survey, we proved that with the increasing development stage of cooperative management the economic impacts of tourism in Slovakia rise. Therefore, in terms of national policy, it is important to encourage the cooperation of stakeholders and the creation of organizational structures in tourism destinations. Countries with developed tourism has understood this relationship more than twenty years ago and now supports reforms aimed at the destination management and creating the competitive organizational structures. As the cooperative destination management develops, destinations also evolve, which is confirmed by the destination life cycle philosophy. We have examined the impact of the life cycle stages on the level of cooperation in selected Slovak destinations. Based on the comparison of the results of the primary research in two destinations, which are at different stages of the life cycle, we observed that the stage of the life cycle affects the level of cooperation of destination stakeholders. The results from an examination of only a small number of destinations cannot be considered universal evidence. It can, however, be used as a guide to explore the relationship of life cycle and cooperation in the destination as the implications for the further research. The level of cooperative management in Slovakia is considerably underdeveloped when compared to countries with developed tourism and this suggests that efforts need to be made to increase the competitiveness of Slovak destinations not only in the domestic but also the international tourism market. It is therefore important to promote cooperation, particularly in destinations that are in the early stages of the life cycle, and thus accelerate the formation of cooperative management, which brings greater competitiveness and better economic impacts. Source [1] BERITELLI, P. 2011. Cooperation Among Prominent Actors in a Tourist Destination. In Annals of Tourism Research, vol. 38, 2011, no. 2, pg. 607-629. ISSN 0160-7383. [2] BUHALIS, D. 2000. Marketing the competitive destination of the future. In Tourism Management, vol. 21, 2000, pg. 97-116. ISSN 0261-5177-99. [3] BUTLER, R. W. 1980. The concept of a Tourism Area Cycle of Evolution: Implication for Management of Resources. In The Canadian Geographer, 1980. vol. 24, no. 1, pg. 5 12, ISSN 1541-0064. [4] BUTLER, R. W. et al. 2006. The Tourism Area Life Cycle: Applications and Modifications. Oxford : Aspects of Tourism 1, 2006. ISBN 1-84541-025-4. [5] CAFFYN, A. 2000. Is There a Tourism Partnership Life Cycle? In Tourism Collaboration and

Partnerships: Politics, Practice and Sustainability. Clevedon : Channel View, 2000, pg. 220-229. ISBN 1-873150-22-9. [6] COHEN, E. 1972. Towards a sociology of international tourism. In Social Research, vol. 39, 1972, no. 1, pg. 164 182. ISSN 0037-783X. [7] COOPER, C: - JACKSON,S. 1989. Destination Life Cycle. The Isle of Man case study. In Annals of Tourism Research, vol. 16, no. 2, 1989, pg. 377-398. ISSN 0160-7383. [8] MARÁKOVÁ, V. 2012. Manažérska organizácia v cieľovom mieste. In GÚČIK, M. a kol. 2012. Manažment cieľového miesta cestovného ruchu. Banská Bystrica : Slovak-Swiss Tourism, 2012, pg. 68-78. ISBN 978-80-89090. [9] MORRISON, A. 2013. Marketing and Managing Tourism Destinations. Oxon : Routledge, 2013. pg. 596. ISBN 978-0-415-67250-4. [10] PLOG, S. C. 1973. Why Destination Areas Rise and Fall in Popularity. The Cornell Hotel and Restaurant Administration Quartely,1973. vol. 14, pg. 55-58. ISSN 0010-8804. [11] UNWTO. 2007. A Practical Guide to Tourism Destination Management. Madrid: World Tourism Organization. 2007. pg. 150. ISBN 979-92-844-1243-3. [12] WANG, Y KRAKOVER, S. 2008. Destination Marketing: Competition, Cooperation or Competition? In International Journal of Contemporary Hospitality Management, vol. 20, 2008, No. 2, pg. 126-141. ISSN 0959-6119. [13] WTTC. 2014. Economic Data Search. Available on the Internet http://www.wttc.org/focus/research-for-action/economic-data-search-tool/. Contact: Ing. Tomáš Gajdošík tomas.gajdosik@umb.sk Department of Tourism and Hospitality Faculty of Economics, Matej Bel University Tajovského 10, 975 90 Banská Bystrica, Slovakia doc. Ing. Vanda Maráková, PhD. vanda.marakova@umb.sk Department of Tourism and Hospitality Faculty of Economics, Matej Bel University Tajovského 10, 975 90 Banská Bystrica, Slovakia

Annex 1 Destination table 4. Indicators necessary for classifying the destinations into life-cycle stages Financial Number of subsidy for overnight Occupancy destination ( ) stays rate (%) Infrastructure Attractive - ness High Tatras 767 068 1 068 548 23,42 15 729 302 Liptov 718 597 1 066 951 16,77 15 873 311 Bratislava 397 486 1 515 212 25,34 18 629 289 Trenčianske Teplice 160 495 274 202 16,00 3486 239 Malá Fatra 157 208 244 759 15,61 3 665 269 Košice 157 089 254 233 18,98 3 296 223 Central Slovakia 123 500 247 359 14,00 2 543 225 Nitra 75 851 187 233 12,07 3 930 141 Trnava 68 547 75 486 13,51 2 683 192 Low Tatras 62 651 106 197 10,66 3 722 225 Rajecká valley 55 800 150 107 15,61 3 665 269 Žitný Ostrov 55 500 104 187 9,59 4 160 141 Orava 51 000 142 750 7,19 3 316 153 Senec 47 923 96 048 5,58 6 350 203 Pieštany 45 000 603 499 17,00 4 931 192 Northern Spiš - Pieniny 42 416 155 738 12,25 2 941 269 High Tatras surroundings 38 500 140 608 15,96 2 413 269 Banská Štiavnica 37 807 92 433 11,09 1 316 190 Tatry -Spiš-Pieniny 26 851 84 001 11,20 4 493 269 Dudince 24 300 295 107 15,00 1930 79 Novohrad 20 183 89 457 6,61 2 891 82 Kysuce 18 654 53 856 6,49 2 540 269 North Zemplín & Horný Šariš 15 685 60 760 5,65 3 346 89 Záhorie 12714 156 982 12,57 3 209 91 Spiš 12 400 72 805 10,15 3 835 189 Šariš Bardejov 12 000 227145 18,51 2 183 182 Turiec Kremnicko 10 000 276 409 8,92 3 087 212 Northern Považie 9 988 111 704 9,97 965 207 Gron 9 000 13 012 5,66 630 190 Slovenský paradise 8 190 39 804 10,20 1 922 174 Northern Nitra - Bojnice 6 174 52 174 19,99 4 780 120 Zemplín 6 000 83 466 1,51 13 521 79 Source: Prepared according to Ministry Transport, Construction and Regional Development, Slovak regional statistics and Regionalization of Tourism in Slovakia, 2014.