Table 1: Tourism share of consumption (per cent)16Table 2. Exchange rate Table: 17SITUATION ANALYSISIntroduction: Tourism is one of the fastest growing industry in the world and it accounts for about 10.7% of the world’s GDP. This sector generates revenues of US$ 500 billion per year while providing employment to about 260 million people world wide. The current growth rate is about 7% per annum. industries. Since a range of factors influence destination competitiveness, including price and non-price factors, there is a need to develop indicators which reflect this. The development of a set of competitiveness indicators would serve as a valuable tool in identifying what aspects or factors influence tourists in their decision to visit other countries.
There are many factors which contribute or affect the growth and demand for tourism. They are: Demographic factors such as population, income in origin country, availability of leisure time, education levels etc. It has been seen that the per capita income is the greatest determinant on outbound tourism flows from different individual countries. The countries having high economic growth are showing growth in outbound tourism as well.
(Crouch 1992, 1995). Qualitative Factors such as Image of the destination and quality of tourist services being provided, cultural similarities etc. Price Factors – These are the most important factors determining the flow of tourists. The cost of tourism includes the transportation costs, accommodation, food and beverages, entertainment etc. These costs are generally flexible and keep on changing depending upon the exchange rate variations, or economic policies or the demand and supply conditions of the market. There have been several studies on the price competitiveness of different destinations. In one of these, it has been shown that an increase in relative costs is linked with a fall in market share in travel from every origin country.
(Edwards, 1995) Thus there is evidence that international travelers are sensitive to price (Crouch 1992). Since price and exchange rate are linked together, it is important to study these parameters. .Moreover, it provides the indication of competitiveness of a destination. It is acknowledged that indicators of destination competitiveness are many and varied. They include objectively measured variables such as visitor numbers, market share, tourist expenditure, repeat visitation, foreign exchange earnings, employment, value added by the tourism industry as well as subjectively measured variables such as richness of culture, quality of tourism experience, destination appeal, scenic beauty.
Some researchers claim that a destination is competitive to the extent that its market share of tourism (measured in visitor numbers or expenditure) is high and/or growing. This indicator accords with the commonly held view that competitiveness is essentially linked to visitor numbers or visitor expenditure. And this is linked to the exchange rate prevalent at the time.
According to other researchers destination competitiveness is associated with the economic prosperity of residents of a country (Crouch and Ritchie 1999, Buhalis 2000). Ultimately, however, it translates to spending power of its residents which can be spent on tourism. Background information: The tourism industry has increased considerably in recent decades and has become one of the main sources of income in many countries (Williams and Shaw 1988, Coccossis and Nijkamp 1995).