Contents

1. CASE STORY.........................................................................................................................................
2. TRAVEL AND TOURISM......................................................................................................................
2.1. TRENDS IN TOURISM...................................................................................................................
2.2. DESTINATIONS AND COMPETITIVENESS................................................................................
2.3. CHALLENGES IN DEVELOPING TOURISM IN PRAGUE.........................................................
3. MANAGING COOPERATION..............................................................................................................
3.1. CHANGING FOR THE BETTER..................................................................................................
3.3. MODEL OF CHANGE...................................................................................................................
3.4. CASE RELEVANT QUESTIONS..................................................................................................
REFERENCES:.........................................................................................................................................

1. CASE STORY
In August, I decided to visit Prague for the first time. As always, I spent some time in
researching various forums and web sites, in an attempt to identify things that could happen
to spoil my vacation. Now, besides the usual warnings of thieves and restaurants and taxi
frauds, people gave a lot of attention to the money exchange.
Feeling sure that I had covered all the potential obstacles to having a perfect tourist
experience, I ventured into the unknown. Prague turned out to be more than I expected, and
we enjoyed our stay tremendously. However, soon I found out that the time I had spent
researching was wasted.

Figure 1: No commission,

best exchange rates

When we arrived to

Prague,

our

guide

showed us a place where we

can exchange the money

without being robbed.

thought that he was

exaggerating I mean, how

can someone be robbed

while exchanging 10 or 20

euro?

exchanged

into

crowns

money and received 1350

crowns.

50

euro

Two days later, I ran

Anyway,
for

pocket

out of money, and made

the same transaction. The next day, I needed more money and I stopped by an exchange
office in the very centre of the city, which was properly marked and seemed like a decent
place. I checked the sign on the door, and read that I would receive 270 crowns for 10 euro.
Feeling confident, I approached the cashier and asked How much will you pay me for ten
Euros? She confirmed the amount on the sign. With an attitude I am a tourist but I will not
be easily cheated, I continued: Any additional charges? She said No. I gave her 10
Euros note. She typed something into the computer and provided me with the receipt and the
money. I went out, and counted the money I received 162 crowns instead of 270! And on
the receipt it was neatly written: 4 Euros charge per transaction.

I counted to ten, trying in vain to control my anxiety, and returned into the exchange
office. When I asked for an explanation, she said that she was sorry and that her English was
bad. Annoyed, I left the office without further discussion. I rechecked the signs on the
entrance and there was nothing about any additional charges. My good feeling was gone and
the first thing I did upon arrival to the hotel was to announce the scam on Facebook. Not that
it helped, but eventually I decided to let it go. It was only 4 euro and not exactly the end of
the world. However, this unpleasant event made me reluctant to shop in Prague, and I decided
to leave the souvenirs and presents for another occasion.
I picked this experience to show how one simple and rather unimportant service can
spoil the efforts of many people who have been working hard to promote and maintain the
image of the city. Even now, that event is the first thing that comes to my mind when I think
of Prague, despite all the natural beauties, welcoming people and gorgeous architecture. I am
aware that many people have had the same experience, and what truly bothers me is the
attitude of the city authorities towards such a practice. After all, when visiting the city famous
for its culture and tradition, who can expect to be cheated?

2. TRAVEL AND TOURISM

The travel and tourism industry has been developing quickly over the past two
decades. The shift from the mass tourism, Sun and beach long holidays in the traditionally
popular destinations to the variety of tourism products, such as adventures, special interest,
city breaks, wellness and spa weekends, has contributed to the tremendous increase in the
number of outbound tourism, supported by the development of technology and transport,
appearance of the internet, globalization and the change in the consumers desires.

2.1. TRENDS IN TOURISM

The global outbound tourism has grown by 4 to 5% every year since 2011, and the
increase is expected to continue in similar fashion in the future. The financial impact of the
outbound tourism has reached US$1750 billion (ITB World Travel Trends Report,
2014).
Traditionally popular destinations are still important, but many, up to now unknown
destinations, are attracting tourists all over the world. City trips, the market segment which
increased by 58% in the past five years, today presents one fifth of the global market( ITB
World Travel Trends Report, 2014).

Figure 2: Most popular cities of the world

Source: CNBC, 2015.
The increasing competition among tourism destinations and the rise and consolidation
of emerging markets as outbound travel markets, as well as the modification of the target
markets for established tourism destinations, have caused destination managers to change
their approach. In order to maintain the attractiveness of the destinations, destination
management organizations turn to developing collaboration within a tourism destination
(Mariani et al, 2014).

2.2. DESTINATIONS AND COMPETITIVENESS

Having in mind huge financial impact of the tourism sector, many countries look for a
way to position themselves in the global market. According to Anholt (2007) "the rapid
advance of globalization means that every country, every city and every region must compete
with all the others for their share of the world's consumers, tourists, investors, students,
entrepreneurs, international sporting and cultural events, as well as the attention and respect
of the international media, other governments and people from other countries". Governments
need to develop the ways of providing quality to tourists visiting destinations in their
countries, and to do so they need to pay attention to both the needs of visitors, as well to the
needs of the firms providing the services.
In tourism, as in all businesses, creating the competitive advantage is the key to
success. Each destination comprises of several elements, such as attractions, accessibility,
human resources, brand image, price and public and private institutions (UNWTO, 2007).
Each of elements contributes to the overall quality of the tourist product. With urban
destinations, dimensions of quality include: presence, place, pre-requisite, people, pulse and
potential. These dimensions measure perception of cities among tourists (GFK, 2014).
The quality in tourism is measured by consumers satisfaction. Satisfaction comes as a
result of met expectations. If there is a gap between expectations and the actual service,
dissatisfaction appears. Consumers form their expectations based on the word of mouth
communications, internet, past experiences and personal needs. Based on the external
communication between consumers and organizations, perception of products and services
are shaped in the consumers minds. Therefore, to be perceived as quality, the service has to
meet expectations. According to Kotler and Keller (2012), among most important factors
leading to consumers dissatisfaction and switching behavior are: deceptive pricing, service
mistakes, billing errors, and cheat.
The tourist product is complex, and represents the sum of variety of services, which
directly or indirectly add to the experience of tourists. Each of the firms engaged in the
process affects the overall quality of the product, which is measured by the satisfaction of the
tourists. Satisfaction depends on the ability of the destination to meet the expectations of
tourists, and it fails to do so, the dissatisfaction appears, causing bad publicity and
diminishing the effects of the activities performed in providing the service.
6

2.3. CHALLENGES IN DEVELOPING TOURISM IN PRAGUE

Prague has become a popular tourist destination in the past two decades and a lot of
its popularity is based on the favorable reviews of visitors on various portals and web sites.
Prague has positioned itself as a vibrant, modern city, with tremendous cultural heritage. As a
result, a record 8.08 million foreign tourists visited the Czech Republic last year, a year-onyear increase of 3 percent (Prague Post, 2015).
Prague has positioned itself as being traditionally modern and excellent place to
discover. The mission of the marketing strategy is to develop a customer friendly approach
to tourists. The goals of the strategy of tourism development are:
-

increasing the number of repeat visits,

foreign currency collection,
increasing average spending per visitor.

Despite the increase in visitors, number of overnight stays has dropped as well as total
expenditure per visitor and the length of stay (Czech Tourism, 2013).

Figure 3: Strategic goals of tourism development

Source: Czech Tourism, 2013
The main competitors of Prague are Vienna and Berlin, leaders in the city breaks
segment. However, there are many cities in Europe working hard to get the interest of tourists

 Budapest, Belgrade, Dresden ... The tourists are well informed, price sensitive and prefer
online communication.

Figure 4: Competitors and their performance

Source: Czech Tourism, 2013

3. MANAGING COOPERATION
As said, service in tourism is a result of a range of public and private organizations
activities. Each of them contributes to the visitors experience. Due to the marketing efforts of
Prague City Tourism, people perceive Prague as a place of culture and tradition. Therefore,
when they are faced with scams and cheat in the rather routine activity of money exchange,
their perception of the quality of overall experience in Prague, despite all other aspects of
their visits that they rated as excellent, changes and causes dissatisfaction.

Figure 5: Trip Advisor Reviews

Source: Trip Advisor, http://www.tripadvisor.com/ShowTopic-g274707-i96k4141270-Exchange_office-Prague_Bohemia.html
Dissatisfaction is expressed in the word of mouth communication, both online and
offline, and causes potential visitors to reconsider their plans for vacation. They might decide
to avoid unpleasant feeling of being cheated by spending less, or by staying three days
instead of five. Or, they might feel it is better to use the exchange services in their own
country and not in Prague. This, however, impacts the economic effect of tourism in Czech
Republic.
In order to avoid the obstacles to achieving their strategic goals, Prague City Tourism
has to involve all interested parties in the development of tourism. This means they have to
act like leaders and motivate both local public and private organizations to recognize the
importance of the strategic development and put the interests of the destination development
above their own.

Exchange offices are a small part of the overall product of tourist destination. But
their behavior is not consistent with the activities of other parties, nor with the brand image of
Prague. Therefore, the change is needed.

Figure 6: The warning on the street

Source: Virtual Tourist, :
http://www.virtualtourist.com/travel/Europe/Czech_Republic/Hlavni_Mesto_Praha/Prague400455/Warnings_or_Dangers-Prague-Money_Exchange-BR-1.html

3.1. CHANGING FOR THE BETTER

In order to diminish negative impact of providers of one element of the overall

service, Prague City Tourism, as destination management organization, can introduce several
activities and measures:
-

compulsory signs on the office windows

the size and the visibility of the signs
the street signs leading to exchange offices that are prepared to promote the

change in the behavior

include exchange offices that are prepared to promote the change in the behavior

in the promotion materials

address the negative recommendations of visitors on online portals,
include public institutions into activities.
10

The key partners are private firms in various sectors that benefit from tourism, as well
as local authorities. The power in the private sector comes from their size and income, and
more powerful they are, more interested they will be in cooperation and in future growth. The
local authorities have power to introduce regulations and provide mechanisms that ensure that
the business behave in compliance with these regulations.

3.3. MODEL OF CHANGE

Kotters eight-step model is based on the idea that organizations fail to adopt to the
changes in the environment (in this case, the environmental changes result from demographic
changes and the shift in consumer behavior, as well as from the increasing number of cities
offering more or less the same service in the global market) because they do not see the
change through. The success of the change depends on the ability of the leader (Prague City
Tourism, as destination management organization) to convince the strategic partners (local
organizations) to accept the change in order to achieve long term success instead of pursuing
short term interests.
Kotters eight-step model goes through the stages:
1. Establish a sense of urgency. The leader has to increase the feeling of the need for
change. One way is to provide the data on performance of Prague and other similar
destinations. The emphasis should be on the decreasing spending and the length of
stay.
2. Form a powerful guiding coalition. The leader should choose partners among
exchange offices owners who are willing to accept the necessity for change and are
powerful enough to influence others.
3. Create a vision. Adding the impact of the increased customer satisfaction to the
assessment of the future performance will provide motivation to the partners to pursue
the vision.
4. Communicate the vision. Communication should be based on the raw model behavior
of the chosen partners in the coalition.
5. Empower others to act on the vision. The service providers in the financial sector are
usually controlled by number of institutions and legislations. There are rules of
ethical behavior and different mechanisms of enforcing new rules of behavior.
6. Plan for and create short-term wins. The activities such as introducing obligatory
signs on the exchange offices, the warnings of potential problems in money exchange,
the support and advertising of those who comply with the strategy should be planned
and their effects monitored.
11

7. Consolidate improvements and produce still more change. As destination management

organization, Prague City Tourism can include the exchange offices that worked
toward the joint vision into regular promotion materials, web presentation and
brochures, rewarding them for their cooperation and motivating them to continue to
do so.
8. Institutionalize new approaches. Announcing the results of the changes on regular
basis also serves as motivation to pursue the strategy further.
The model addresses some of the power issues around making change happen,
highlights the importance of a felt need for change in the organization, and emphasizes the
need to communicate the vision and keep communication levels extremely high throughout
the process (Cameron and Green, 2009, 114). The model focuses on arising the willingness of
all involved in the developments, and emphasizes the role of each partner. Since the
destination success depends of actions and performance of all partners equally, this model is
suitable for the change management in the case of Prague destination management.

3.4. CASE RELEVANT QUESTIONS

-

Does the leader (Prague City Tourism) have the authority to conduct the change

and is it powerful enough to impact private and public organizations to cooperate?

Are the private companies in tourism sector aware of the problem?
Are the planned activities feasible in legal terms ?
What can be used to persuade and motivate partners in the destination to act

toward the mutual goal?

How to ensure that partners understand that effects of the planned actions are long

term?
How to persuade the partners to forego short term financial benefits?
How to ensure that the partners realize that individual consumers can impact the

huge audience, as well as achievement of the strategic goals of the destination?

REFERENCES:
1. Anholt , S. (2007). Competitive Indentity. New York: PALGRAVE MACMILLAN
2. Cameron, E, Green, M. (2009) Making sense of change management : a complete
guide to the models, tools and techniques of organizational change, London: Kogan
Page Limited.

12

3. CNBC,

2015,

Most

popular

cities

to

visit

in

2015,

Available

from:

http://www.cnbc.com/2015/06/03/most-popular-cities-for-tourists-in-2015.html, Date
of access: 19th November 2015
4. Czech Tourism, 2013, Czech Republic Marketing Strategy, available from:
http://www.czechtourism.cz/getmedia/8a83c526-c17f-48de-8d73b4e2668974b8/04_06_14_marketingova_koncepce_eng.pdf.aspx, Date of access: 19th
November 2015
5. GFK,
2014,

Place

branding

research,

Available

from:

https://www.gfk.com/Documents/GfK-Place-Branding.pdf, Date of access: 19th

November 2015
6. ITB
WORLD

TRAVEL

TRENDS

REPORT,

2014,

http://www.itb-

berlin.de/media/itbk/itbk_dl_en/WTTR_Report_A4_4_Web.pdf
7. Kotler, P., Keller, K.L. (2012). Marketing Management. Upper Saddle River,New
Jersey: Prentice Hall.
8. Mariani, M.M., Buhalis, D., Longhi, C., Vitouladiti, O. (2014) Managing change in
tourism destinations:Key issues and trends, Journal of Destination Marketing and
Management, Volume 2, Issue 4, 269-272
9. Prague Post, 2015, Record number of tourists visit Czech Republic, available from:
http://www.praguepost.com/czech-news/43877-record-number-of-tourists-visitsczech-republic, Date of access: 19th November 2015
10. UNWTO (2007) A Practical Guide to Tourism Destination Management.

13