Selecting a Site for Tourism Business Development

8/2/2019 Selecting a Site for Tourism Business Development

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Selecting a site for tourism

business development


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Site selection

There are factors that we should considerwhen starting a business.

The most important one is LOCATION

(Smith, 1995/1999). Why?

Because changing a site of a business that

has been established is very difficult andcostly.


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The process of tourism site selection cansignificantly influencea business

profitability and survivability.

Location directly influence a customers

decision about which business to shopfrom, frequent or support.


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Site selection principles andprocedures in tourism

Site selection principles

Procedures in tourism


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Location Theory

Location theory is associated with VonThunen (1885).

A model that involved an isolated market

place surrounded by an isotropic(homogenous surface) plane.

His model focused on:

the comparative value of crops, the cost of transportation of each crop,

their bulk and their perishability.


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Central place Theory (CPT)

By Christaller (1933)

The central place is located to maximizeaccessibility for people from the surroundingregion.

CPT focus on urban areas as Central places

Central places - Places where there isconcentration of economic activity

CPT is very important in economicgeography.


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Location theorists have developed several conceptsthat are useful for site-selection work in business,including tourism.

1. Location is both theoretically and practically important indetermining the size and success of a firm (eg touristresort).

2. The choice of a good location involves trade-offs amongtransportation costs, production costs, resourceavailability, labour availability, market accessibility andland costs.

3. Certain types of businesses perform well if they avoidlocating close to competitors; while other benefit frombeing close.


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4. Population size and the number and location of competingfirms can limit the potential for new business growth inpredictable way.

5. Business that require the shipping of heavy or bulkyitems required for production or that are closely tied toparticular resources with tend to locate close to thoseresources.

a) Businesses that produce heavy or bulky productswill tend to locate close to their market.


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Site Selection for tourism

Three methods

1. Checklist method

Is a simple, systematic consideration of the keycharacteristics of a number of pre-selected sites.

Common tool used by business developers.

The method allows the developer to select eitheran optimal (best) site or to rank order available

ones.


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Advantages of checklist method

Low cost

Simplicity Flexibility

General objectivity

Can be applied to virtually any scale ofbusiness development or project

Eg selection of an international tourist resort toa small scale craft shop.


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Disadvantage (or risk)

1. The ease at which the method is used introduces risk E.g. evaluation of each site depend on the skill, insight and experience of

the evaluator.

2.Method does not provide any form of calculation to compare sites onmultiple criteria

One business planner might note that one site performs better ontwo relatively unimportant characteristics but only moderately well

on an important quality but weakly on two lesser importantqualities.

It is difficult to choose because the checklist method doesnot provide advice in this case.

3. does not provide any quantitative estimates ofmarket share, return on investment, r netprofitability.


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1. identify the important locational criteria forthe type of business being considered

the criteria should be divided into critical

and desirable attributes.2. Once the critical and desirable attributes are

developed and listed then each attributeneed to be operationalized. Eg is how manyfront office staff we need, what skills?

Read procedure on page 154. Procedure 1-6.

There is a good example on page 155example of how sites can be assessed for atourism business.


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2.Analogue Method (page 156)

This method was pioneered by William

Applebaum in the 1930s- A site selectionexpert of Kroger Company in the USA.

Was later adopted by the US Army Corps ofEngineers (ACE) for predicting visitationrates at Corps recreation sites (1974).

ACEs mission:is to manage and conserve thosenatural resources, consistent with the ecosystemmanagement principles, while providing quality publicoutdoor recreation experiences to serve the needs of

present and future generations.


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Army Corps of Engineers (ACE)

Are involvement in dam construction to control

river flows, build lake reservoirs, and producehydroelectric power.

Part of their charter is to also open up theseriver and lakeside areas to the public andprovide recreation opportunities for fishing,boating and camping.

With over 2,500 recreation areas at 450+ lakesmanaged by ACE, there certainly are manychoices (leisure, tourism and out door recreation).


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The analogue methods guides site selection byproducing a forecast of visits or sales by comparinga proposed site (s) with an existing site(s) that are

similar relevant characteristics.

This method uses analogue data base

Analogue data base is a series of profiles of existing

sites to be used for comparison and forecasting. Each analogue site profile describes a successful

site.

Eg. a climate change analogue approach can be used toexamine how a wider range of ski area performanceindicators were affected by anomalously warm winters in theNortheast region of the USA


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The indicators examined include: ski seasonlength, snowmaking (hours of operation and %

energy utilized as a proxy for fuel costs), totalskier visits and operating profit (% of totalgross fixed assets).


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Advantages

useful

The method guides site selection byproducing a forecast of visits or sales bycomparing a proposed site(s) with an

existing site (s) that is similar in relevantcharacteristics.

Can help researchers or tourism developers

chose a good site for business


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Disadvantages The model lacks any theoretical base.

Highly dependent on the skill of the individualanalyst.


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Analysis of residuals

Is a quantitative method for estimating the

relative potential of several locations tosupport tourism business growth.

(NB similar in many ways to Checklist

method).

AR permits examination of several locationssimultaneously on the basis of previously

specified attributes.(Pages 161 164). Unlike Checklist method) AR is applicable to only

regional-scale location choice and is not used for

choosing specific sites


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AR method is based in part to the idea ofeconomic equilibrium (EE)

EE refers to the idea that the number ofbusinesses a region can support is influenced bya range of social and economic conditions andthat the number of businesses slowly changes

until equilibrium is reached (Smith, 1995). A longitudinal research can be conducted to

understand the changing numbers of firms ortourism enterprises over time as they adjust to

changing conditions.

However, longitudinal research is very expensivefor some businesses or projects. (time and budget

requirements)

Selecting a Site for Tourism Business Development

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