The Investment Strategies for the Development of a Tourism Destination

• Main Authors: Shih-Ming Ou, 歐世明
• Other Authors: Ching Chang
• Format: Others
• Language: en_US
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/28151008152893097566

博士 === 中華大學 === 科技管理學系(所) === 97 === As the tourism revenues gradually influence the local economy in Taiwan, how to develop and to manage tourism destinations becomes a critical issue for the government in its intention to make the tourism industry prosperous and to control tourism's environmental impacts. This research discusses two kinds of investment strategies for the growth of a tourism destination. In the first part, it explores the question of how recreation specialization affects the development of a tourism destination over time. I formulate the development process as an optimal control problem by adjusting specialization investments for the purpose of either attracting more tourists or discouraging tourists from visiting. My research suggests investment strategies for two types of tourism destination consistent with the intensity of correlation between recreational activities and degree of specialization. The data show that when the influx of tourists exceeds the carrying capacity of a destination, tourism companies will reduce investment to avoid congestion. Otherwise, companies will increase expenditures to maximize profits. Then, I discuss that the effect of friction of geographic distance discourage tourists to visit the tourism destination, while cognitive proximity plays the role of increasing interactions between tourism companies and their potential tourists. Through an endogenous spill-over effect, this research discusses the differentiation strategy of under the three-stage game process, acquiring a better understanding of the relationship between proximity investment sizes and pricing. Accordingly, I provide solutions to the three managerial problems including featured product design, increasing cognitive proximity investment size, and pricing. I also show that with considering spill-over effect, the free-rider condition is the decisive factor in tourism companies’ investment decisions.