MANAGING PRODUCTIVITY IN THE TOURISM INDUSTRY:
BETTER STUDIES NEEDED FOR THE NEW ERA
Nguyen Khanh Huy”, Le Trung Hieu? ABSTRACT
Tourism productivity takes a central stage in the new cra in the Vietnam economy However, the study for this topic is inadequate with out-dated measurement methods and insufficient data With the view to faster fulfilling the strategic mission for developing tourism industry in Vietnam, there needs to be more effective tourism productivity researches The article provides a deeper review on the literature of tourism productivity to make the way for further studies
Keywords: Tourism management, tourism productivity, productivity management, tourism, Vietnam
1 INTRODUCTION
In the global economy, service industries have been growing steadily over the years Tourism of which is witnessed as one of the
1 Center for International Training and Education, VNU University of Economics and
Business, Vietnam
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leading services in the world However, it is difficult to measure
tourism productivity, so is service productivity Moreover, literature on tourism productivity is inefficient and in need of having greater
research efforts (Assaf and Tsionas, 2018) Tourism productivity is
quite diverse, not only compatible and usually based partly on labor
productivity (Pham, 2019) Many researches were carried out but concluded quite the same that: Different firms, different management
methods are needed to measure tourism productivity
About the tourism industry and tourism productivity, the
World Tourism Organization (UNWTO) defines tourism as
including the activities of individuals who travel to and stay in places outside their regular residence for more than 24 hours but not longer than one year in a row for entertainment, business, and other purposes The International Trade Organization (WTO) recommends travel services including those provided by hotels, restaurants, travel agencies and tour program management services, tour guide services, and other related services As such, it can be seen that tourism service is relatively well understood, covering a wide range of activities ranging from transportation,
program organization, catering, entertainment, accommodation,
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tourism potential is great and the exploitation must be improved in the next year for better development
The economy in Vietnam has steadily developed since 2015 The GDP growth rate maintains over 6% and is expected to rise beyond 7% in the next 5 years With the economic transitions
from agriculture and industry to service, the importance of the
service industry such as tourism is getting higher The direct value contributed by the tourism industry to GDP continued to increase,
from 6.3% (2015) to 6.9% (2016) and 7.9% (2017) The World
Tourism Organization identified Vietnam as one of the best tourism attraction in the upcoming 10 years so that tourism development is considered a vitally strategic mission for Vietnam
2 LITERATURE REVIEW
2.1 Productivity management
Traditionally, productivity management is concerned with the distribution of input to achieve appropriate output In Adam Smith's first study of The Wealth of Nation published in 1774, there were many definitions of productivity, new approaches to productivity Productivity clarifies the performance of business operations It is necessary for managers to analyze the situation of their enterprises and orientations to solve the problem
According to Adam Smith (1776), productivity was calculated
as follows:
Productivity = Outputs/Inputs
The input values are determined as resources such as labor, capital, land, materials, energy, and information; and for the type of product or services, inputs are quite different According to the
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Service productivity = Quantity and Quality of outputs/Quantity and Quality of inputs
(Source: Vuorinen et al., 1998)
Beside the quantity of input needed, the research concentrates more on the quality of outputs And the quality of output further leads to the quality of service However, the process of choosing the right quantity and quality or the input selection is still a challenge While quality in tangible goods was described and measured by marketers, quality in services is largely undefined and un-researched (Parasuraman, Zeithaml, and Berry, 1985) Therefore, a better measurement for productivity needs to be presented
Modern researchers are drawn to productivity In the new era of economy, productivity defines the efficiency and effectiveness of a firm (Joppe and Li, 2016) Productivity improvement is the results of managing and intervening in the transformation of work processes either by reducing the inputs needed to create the same output or by generating more output from a given set of inputs
Therefore, increasing productivity means increasing the usage of
inputs and outputs or in other words, increasing the revenue to the firm Productivity measures provide benchmarks for evaluating
methods and improving the use of labour, automation and logistics as well as developing equitable, motivational employee reward
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environment such as: government policy, the economy In summary, productivity is a dependent variable in the model of study and not completely similar to traditional productivity variable in
manufacturing
Productivity not only works for a unique firm, it can be described
as the most comprehensive single measure of performance across all industries and one of the most reliable indicators appropriate for
comparison (Liu and Wu, 2019) The reason is that productivity
coverage is diverse In order to increase productivity, the industry must thoroughly review both financial and operational performance of each firm in the industry Once the performance has been enhanced, the productivity would be better Therefore, productivity can be an effective measure for a particular industry The problem is that in the service sector, the conceptual and practical problems associated with constructing appropriate indexes to measure productivity are substantial (Li and Prescott, 2009) which means service productivity is difficult to measure In order to complete the task, studies narrow the scope of measuring by choosing particular field of research After that, the selection of inputs and outputs becomes clearer For
example, in the research named “Factors influencing productivity
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Moreover, productivity management is essential in the macro
level - for the whole country Pham T:D (2019) stated that in the
national level, productivity provides a strong basis for policymakers to reveal the country’s strengths and weaknesses In summary, researching productivity can be of great use from micro level (in firms) to macro level (in industries and countries) in the modern economy From the previous studies, productivity is calculated by dividing the number of inputs to the number of outputs which measures the effectiveness of using inputs to produce outputs However, in the new context, the ratio calculation is out-of-date and only utilized in manufacturing industries When the international economy has been transforming to serviced industry, productivity management must be considered in
complex models Particularly in a service, the phase of manufacturing
is separated from the phase of product sale and the phase of delivery An effectively produced firm does not mean its product sale is good Therefore, the definitions of “productivity” is implemented to calculate
if one more money unit is put into production, how much more
revenue can be generated Other firm in service factor can utilize other methods for productivity management
2.2 Tourism productivity
Tourism can be defined as “a collection of activities, services
and industries which deliver a travel experience comprising
transportation, accommodation, eatingand drinking establishments,
retail shops, entertainment businesses and other hospitality services provided for individuals or groups traveling away from home by UNWTO The definition is referred to visitors who take a trip
to a main destination outside of their environment, for less than a year, for any main purpose related to business, leisure or other
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in the country or place visited (Li, Jin, and Shi, 2018) Tourism is different from travel In order for tourism to occur, there must
be a displacement: an individual has to travel, using any type of means of transportation (he might even travel on foot: nowadays, it is often the case for poorer societies, and happens even in more
developed ones, and concerns pilgrims, hikers ) But all travel
is not tourism In other words, tourism is a person’s or a group’s activities in a destination and the activities generate revenue to the destination It is considered a “clean service” that can help develop
a destination, the economy, the country without damaging the environment like what the industrialization has caused
Productivity isn’t everything, but in the long run it is almost everything (Assaf and Tsionas, 2018), especially in the context of tourism Tourism productivity has been identified as one of the most important mission for global economic development in the next 10 years The life cycle of the tourist destination product in a certain area depends largely on the ability to combine and manage inputs efficiently to produce given output targets in tourism (Cracolici,
Nijkamp, and Rietveld, 2008) In other words, productivity is
considered to be a vital tourism factor and productivity is greatly relevant to economic development Tourism is an impetus to promoting economic growth from the perspectives of measurement of its economic impacts, contributions to poverty reduction, the efficiency and productivity, and impacts of several external economic
factors (Li, Jin, and Shi, 2018) Therefore, enhancing the tourism
productivity is the not only the mission of the tourism industry itself but also the issue for the whole country Consequently, the key determinants of tourism efficiency and productivity, including
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input variables, while expenditure, revenue, and length of stay were
adopted as output variables In summary, tourism productivity is usually considered a dependent variable in researching models
However, in the new context, tourism productivity is proved to be
an independent one Productivity in tourism can create destination
competitiveness (Knezeviđờ Cvelbar et al., 2016) The model shows
that tourism productivity can affect the destination competitiveness After that, an increase in competitiveness produces more revenue and helps the tourist destination become more popular The tourism productivity is considered as an input for competitiveness study Moreover, governments can play a substantial role in enhancing the economic impetus of tourism Through balancing
the economic impacts and social, environmental, and political influences of tourism, governments can efficiently distribute
tourism investment With the assistance of proper redistribution policies and employment training projects, the goal of poverty
reduction might also be achieved Additionally, there is potential for governments to improve tourism efficiency, enhance tourism competitiveness, and eliminate the adverse impacts of external
economic factors by providing pre-employment training, attracting
FDI, offering tourism subsidies, encouraging the adoption of
advanced technology, and fostering a standard tourism market (Li,
Jin, and Shi, 2018)
While tourism demand analysis is a central topic for economists, the measurement of efficiency and productivity with a view to the optimal management of resources is also of major interest (Peypoch
and Solonandrasana, 2008) However, the measurement methods
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appropriate measures of those inputs and outputs, and (3) ascertaining appropriate ways of measuring the relationship between inputs and outputs (Joppe and Li, 2016) Selection of suitable measures of productivity depends on the purpose of the productivity measurement and/or data availability Ultimately, all aspects—inputs, intermediary products (materials, components, supplies, energy, and_ services purchased from other producers), and output—trequire acceptable measures that can be compared across units, sectors, and countries Many of the tangible elements used in the production of experiences are less important than they might be in manufacturing ‘There is a shortage of methods of measurement for tourism productivity Most applied research in the field of tourism uses the Data envelopment
analysis (DEA) methodology These studies all assume that there is
an input or output oriented approach as the measures used attempt either to quantify the savings that can be made with a given level of production in the first case or to quantify the production gains that can be achieved for a given level of production factors in the second (Peypoch and Solonandrasana, 2008)
2.3 The research gap
As mentioned above, the studies in tourism productivity is
inadequate both in research content and method Tourism is a rapidly emerging, new economic sector in a globalizing world The number of competing tourist destinations is vast and prompts fierce
competition by alternative tourist sites, there needs to be more
studies on tourism productivity to further develop the economy Interest in this sector by economists and policymakers has lagged behind the rapid expansion of the sector, and the concept of services productivity has largely been neglected (Joppe and Li,
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research which means different countries, economies, firms have
different research content Joppe and Li (2016) re-stated that there is a need for better tools in productivity measurement globally The measurement only focuses on the relationship of inputs and outputs Therefore, the comparison among countries, economies or even among firms cannot be completed Consequently, different solutions are implemented and it hinders the effectiveness management In addition, the operating firms have no indexes for analyzing the performance or management of productivity It leads to the situation that firms with specific number of capital, resources choose specific productivity management method and there would be no systematic management in a country In conclusion, the research content needs to be improved by aiming to establish a systematic research for countries, economies and firms with the
same characteristics
Besides, the study method is not adequate as well Most applied research in the field of tourism uses the Data envelopment
analysis (DEA) methodology These studies all assume that there is
an input or output oriented approach as the measures used attempt either to quantify the savings that can be made with a given level of production in the first case or to quantify the production gains that can be achieved for a given level of production factors in the second With different studies, the independent variables are irrelevantly selected and consequently, the results are different DEA method is constructed by observed data and requires small sample size — not like what in other method Therefore, DEA is suitable only for regionally-analyzed researches — not applied in larger scale which
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3 CONCLUSIONS
There needs to be better studies for tourism productivity in the new economic era in Vietnam The fast growing rate of tourism contribution to GDP in Vietnam can be temporary; therefore, policymakers have to take actions right in the booming time The upcoming 10 years may witness Vietnamese development reaching the external border and tourism is the strategic tool to achieve the mission A complete method for enhancing tourism productivity can be of great use at this time With the fact that studies for tourism productivity is still vacant, the new economic era requires better methods
In addition, the tourism trend is changing annually The most recent trend belongs to smart destination where the information is clear to tourists before, during and after they take the trip Smart tourism is a logical evolutionary development of traditional tourism and e-tourism in which the ground for technology-driven innovation has been established Inspired by the idea of smart cities, smart tourism destinations are innovative tourism destinations built upon a modern technology infrastructure that promotes sustainable and accessible development of tourist areas that are designed to lead to improved tourism experiences and an enhanced quality of life for
resident (Shafiee et al., 2019) In other words, smart tourism relates
to technology including: digital, intelligent, and virtual technology
Information relating to tourist activities, the consumption of products,
and tourism and social resources can be instantly integrated based on
information and communications technology Therefore, syncing the
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Finally, there are inadequate studies for tourism and productivity and the modern environment for economy change quickly so that the researches for this topic must be encouraged and fully-supported
in the near future REFERENCES
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