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Tovmasyan G.R. ©
PhD in Economics, Professor at the Tourism and Crisis Management Department, Armenian State University of Economics
TOURISM COMPETITIVENESS IN THE REPUBLIC OF ARMENIA
Summary
Tourism competitiveness is the ability of a certain place to optimize its attractiveness for residents and non-residents, to provide quality, innovative and attractive tourism services to consumers and to gain market shares on the domestic and global market places. According to the Travel & Tourism Competitiveness Report 2015 Armenia was at the 89rdplace among 141 countries. The article discusses the tourism sphere current statistics in the RA, Armenia's tourism competitiveness index and the main challenges. Some suggestions are made to raise tourism competitiveness and to advance tourism industry in Armenia.
Keywords: Tourism, tourist, competitiveness, tourism value chain.
Ключевые слова: туризм, турист, конкурентоспособность, цепочка ценностей туризма.
Tourism is a global phenomenon which develops very fast involving more and more people worldwide. International tourist arrivals reached 1,133 million in 2014, a 4.3% increase over the previous year [10, 5]. The total contribution of Travel & Tourism to GDP was USD 7,580.9bn (9.8% of GDP) in 2014, and is forecast to rise by 3.8% pa to USD 11,381.9bn (10.5% of GDP) by 2025 [12, 1].
According to the law of the Republic of Armenia "About tourism and tourist activities" tourism comprises the activities performed by citizens, travelling in the informative, recovery, sports, religious, professional, business, rest and other purposes, from the place (country) of permanent residence to other place (country) mostly for the term up to one year without interruption [8].
In Armenia tourism was anounced as a main sector of economy. In recent years the number of tourists has increased. In 2014 1,203,746 tourists visited Armenia, and in 2013-only 1,085,985 tourists did [6, 1]. Here are some data of Armenia's tourism sphere analysis.
Index US $mn % of total
Travel & Tourism (T&T) direct contribution to 396.6 3.6
GDP
T&T total contribution to GDP 1406.5 12.7
T&T direct contribution to employment (1000 jobs) 37.1 3.1
T&T total contribution to employment (1000 jobs) 133.7 11.3
Visitor exports 923.1 31.0
Domestic spending 173.9 1.6
Leisure spending 857.7 2.8
Business spending 239.3 0.8
Capital investment 79.9 3.5
Figure 1. Travel & Tourism economic contribution in 2014, Armenia [11, 11].
The number of hotel facilities was 268 in the RA in 2014, which included hotels, hostels, resorts, rest houses, etc. Their accommodation capacity was counted 14395 places [7, 191].
© Tovmasyan G.R., 2016 г.
The main types of tourism which have a great potency to develop in Armenia based on the existing assests are as follows: historic, cultural, religious, wellness, sport, eco- and agro- tourisms.
For tourism development it is very crucial to increase the competitiveness of the sphere. To illustrate the essence of competitiveness it is necessary to observe various explanations. For example the OECD defines competitiveness in two levels - the firm and the nation. While for a nation the aim is to maintain and improve its citizens' living standards, for a firm the object is to deal successfully with international competition by making profits and increasing its market shares [5, 3]. Another definition gives the European Commission, according to which competitiveness is "a sustained increase in the standards of living of a nation or region and as low a level of involuntary unemployment as possible" [4, 15].
Tourism competitiveness for a destination is the ability of the place to optimise its attractiveness for residents and non-residents, to deliver quality, innovative, and attractive (e.g. providing good value for money) tourism services to consumers and to gain market shares on the domestic and global market places, while ensuring that the available resources supporting tourism are used efficiently and in a sustainable way [3, 14]. Consequently, the Travel & Tourism Competitiveness Index (TTCI) measures "the set of factors and policies that enable the sustainable development of the Travel & Tourism sector, which in turn, contributes to the development and competitiveness of a country" [9, 3].
According to the Travel & Tourism Competitiveness Report 2015 which was published by the World Economic Forum within the framework of the Global Competitiveness and Risks team and the Industry Partnership Program for Aviation & Travel, Armenia was at the 89rd place among 141 countries (in 2013 was the 79rd). Spain was the top of the 2015 edition of the TTCI global rankings for the first time, followed by France (2nd), Germany (3rd), the United States (4th), the United Kingdom (5th), Switzerland (6th), Australia (7th), Italy (8th), Japan (9th) and Canada (10th) [9, 5].
Index Rank (out of 141) Score (1-7)
Travel & Tourism Competitiveness Index 89 3.42
Enabling Environment 57 5.00
Business Environment 50 4.62
Safety and Security 38 5.80
Health and Hygiene 48 5.92
Human Resources and Labour Market 71 4.48
ICT Readiness 69 4.16
T&T Policy and Enabling Conditions 95 3.90
Prioritization of Travel & Tourism 80 4.43
International Openness 83 2.78
Price Competitiveness 77 4.58
Environmental Sustainability 97 3.79
Infrastructure 84 3.14
Air Transport Infrastructure 92 2.26
Ground and Port Infrastructure 97 2.98
Tourist Service Infrastructure 73 4.18
Natural and Cultural Resources 130 1.63
Natural Resources 136 1.88
Cultural Resources and Business Travel 99 1.38
Figure 2. Travel & Tourism Competitiveness Index of the Republic of Armenia [9, 78]
Armenia is ranked number one in the world in terms of population's access to clean drinking water and mobile network coverage and is at the bottom of the list in terms of the number of HIV-infected people. Armenia is also the 38th in terms of safety, 48th in terms of health care, 71st in terms of quality of human resources, 112nd in terms of ease of finding skilled employees, 73rd in terms of tourism services infrastructure, 77th in terms of price affordability, 83 rd in terms of international openness, 92nd in terms of aviation infrastructure, 99th in terms of cultural resources and business travels, 117th in terms of effectiveness of marketing to attract tourists, 80th in terms of quality of roads, 125th in terms of quality of the natural environment [9, 79].
Despite the decline of Armenia's position, there are some positive developments in the competitiveness of the tourism sector, particularly in terms of numbers of hotel rooms and the number of ATMs accepting Visa cards. The comprehensiveness of tourism data, price parity and fuel prices indicators have improved. Among the challenges that hinder the growth of Armenia's competitiveness in the tourism sector, are the following:
- Low level of current situation and conservation of the environment and natural resources,
- Low productivity of marketing efforts for tourism promotion,
- High air ticket taxes and airport charges,
- Low level of staff training and a lack of skilled labor, etc. [2].
To increase tourism competitve advantage it is necessary to observe the indicators of tourism value chain. The tourism Global Value Chain (GVC) presented in Figure 3 follows a tourist "footprint" in a value chain, details the steps and the firms a tourist interacts with from the moment they decide to take a trip to the completion of their international journey. The cumulative activities together represent tourism in its entirety.
Outbound Country
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To un st
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Im- Air Carrier
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lUu|fY Hon-il
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Tour apt» rata*
Hfttionai Tour Operator
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Ground _rBfisp0rt3HLLan ÜCfVl^fi
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Figure 3. The Tourism Global Value Chain [1, 11]
Thus a comprehensive and complex approach is needed to improve the work in all circles of the tourism value chain in order to promote and increase tourism sphere competitiveness in Armenia. The following steps must be undertaken:
To increase the effectiveness of marketing performance to attract tourists by using a large set of marketing tools (also e-marketing) presenting the country's tourism brand abroad and promoting the sphere development,
- To improve the price competitiveness index by the indicators of ticket taxes, airport charges,
- To raise environment sustainability with the indicators of stringenting and enforcing environmental regulations,
- To increase the conservation of the environment and natural resources,
- To enhance the quality of air transport and ground infrastructure,
- To advance tourism service infrastructures and tourist distribution channels,
- To enable investment policy for promoting investments in the sphere,
- To implement staff training programs according to international practice in order to have
skilled and competitive employees,
- To improve the price and quality indicators of tourism services,
- To reform the work in all circles of the tourism value chain,
- To expand tourist excursion programs, etc.
Thus, the above mentioned steps will help to increase the competitiveness of tourism sphere in
Armenia.
References
1. Christian M., Fernandez-Stark K., Ahmed G., Gereffi G., The Tourism Global Value Chain: Economic Upgrading and Workforce Development, (2011), Center on Globalization, Governance & Competitiveness, Duke University, URL: http://www.cggc.duke.edu/pdfs/2011-11-11_CGGC_Tourism-Global-Value-Chain.pdf
2. Civilnet 2015, Armenia was the 89th among 141 countries with its tourism competitiveness. URL: http://civilnet. am/2015/05/07/travel-tourism-competitiveness-report-2015-armenia/#.VkR7n9yLSUk
3. Dupeyras, A., MacCallum N., "Indicators for Measuring Competitiveness in Tourism: A Guidance Document", (2013), OECD Tourism Papers, 2013/02, OECD Publishing, URL: http://www.oecd.org/cfe/ tourism/Indicators%20for%20Measuring%20Competitiveness%20in%20Tourism.pdf
4. European Competitiveness Report (2008), European Commission, URL: http://aei.pitt.edu/45440/1/ Competitiveness_2008.pdf
5. Hatzichronoglou, T. "Globalisation and Competitiveness: Relevant Indicators", (1996), OECD Science, Technology and Industry Working Papers, 1996/05, OECD Publishing. URL: http://www.oecd-ilibrary. org/docserver/download/5lgsjhvj 7nlw.pdf?expires= 1454495207&id=id&accname=guest&checksu m=35D36DE2ECFC4C923B5D99F0A1CF3942
6. Socio-Economic Situation of RA, 2015, National Statistical Service of the Republic of Armenia, (in Armenian), URL: http://armstat.am/file/article/sv_01_15a_421.pdf
7. Statistical Yearbook of Armenia, 2014, Yerevan (in Armenian), URL: http://armstat.am/file/doc/ 99493628.pdf
8. The law of the Republic of Armenia "About tourism and tourist activities", Article 2, 2003, (in Armenian), URL: www.laws.am
9. The Travel & Tourism Competitiveness Report 2015, World Economic Forum, Geneva, 2015, URL: http://www3.weforum.org/docs/TT 15/WEF_Global_Travel&Tourism_Report_2015.pdf
10. UNWTO Tourism Highlights, 2015 Edition, URL: www.unwto.org
11. WTTC Travel & Tourism Economic Impact Armenia 2015, URL: http://www.wttc.org/-/media/files/reports/economic%20impact%20research/countries%202015/armenia2015.pdf
12. WTTC Travel & Tourism Economic Impact World 2015, URL: https://www.wttc.org/-/media/files/reports/ economic%20impact%20research/regional%202015/world2015.pdf
