GOAL PROGRAMMING Planning Process of Tourism Organizations

Richard L. Seely World Tourism Organization, Spain Harvey J. iglarsh Georgetown University, USA David L. Edgell Department of Commerce, USA

ABSTRACT Seely, Richard L., Harvey J. lglarsh, and David L. Edgell, Goal Programming: Planning Process of Tourism Organizations. Annals o f Tourism Research 1980, VII(3): 353-365. The complex rapidly changing environment faced by tourism organization officials makes tourism planning extremely difficult. Goal programming can aid the tourism planner in appraising the goal attainment potential associated with proposed tourism marketing program alternatives. By changing priorities of goals, budgetary limitations, and organizational constraints, the policy maker can test the effect of changes before they are implemented. By utilizing goal programming, a tourism organization can more systematically evaluate the nature and relative importance of organizational goals, critical constraints affecting the organization and marketing program alternatives. Keywords: tourism management, goal programming, management science, tourism planning, budgeting, control, models.

Richard Seely, prior to joining WTO, was an Assistant Professor of International Management in the School of Business Administration of Georgetown University. Dr. Seely's research interests center on national tourism planning, tourism forecasting, and national tourism office operation. Harvey lglarsh is Assistant Professor of Management Science in the School of Business Administration of Georgetown University. Dr. lglarsh's research interests focus on tourism forecasting, statistical analysis, and quantitative applications to managerial decision making. David Edgell is Senior International Economic Policy Advisor, International Trade Administration, U.S. Department of Commerce. Dr. Edgell's research interests focus on tourism forecasting, bilateral tourism agreements and tourism planning. Dr. Edgell is currently a Professorial Lecturer at The George Washington University in the area of tourism.



Igbrsh et David L. C'est en changeant l'ordre prioritaire des objectifs. des limitations budg~taires et des contraints organisationnels que le planificateur peut soumettre les changements ~'ventuels ~ des essais pour d&erminer leurs effets avant de r~aliser le programme. Edgell. For private sector tourism organizations such as airlines and hotel chains. For many countries tourism holds great potential for improving the economic performance of the national economy (Walton 1976). The following discussion uses a public sector tourism organization to illustrate the application of goal programming. and promoting international goodwill. INTRODUCTION All tourism organizations must plan within the complex rapidly changing international environment. goals can include increasing profits. programmation des objectifs. les contraints critiques qui la touchent et les diverses possibilit~s pour un programme de marketing. Richard L.GOAL PROGRAMMING RESUME Seely. une organisation de tourisme peut evaluer plus systematiquement la nature et l'importance relative de ses objectifs. Harvey J. planification du tour&me. budg(tisation. Mots clef: gestion du tourisme. Goal programming allows planners to set relative priorities for the various organizational goals and then test how effectively resources can be allocated to attain these goals. For public sector tourism organizations these goals can include increasing the contribution to the country's balance of payments position. science gestionnaire. and attaining a given market share. Les directeurs des organisations touristiques ont de plus en plus de mal dans la planification du tourisme dans un monde toujours plus complexe et constamment boulevers~. all competing for the limited resources of the organization. moddles. raising the standard of living of the population. governments are raising the level of public support and assistance directed at stimulating the growth and development of this key economic activity. La programmation des objectifs peut aider le planificateur en tourisme a evaluer les potentialite~ qui sont associ~s aux diverses solutions de rechange d'un programme propose" pour le marketing du tourisme." Annals of Tourism Research 1980. 354 1980 ANNALS OF TOURISM RESEARCH VII(3) . Avec la programmation des objectifs. VII (3): 353-365. increasing sales volume. They pursue a multiplicity of goals. however.. the technique applies equally well to the private sector. " L ' A p plication de la programmation des objectifs: Le processus de planification dans les organisations touristiques. contr61e. Realizing this.

& EDGELL Many tourism officials believe that the most effective manner in which a government. Little 1978) that compete for the limited available resources allocated to their organizations. goal programming seeks a solution that best satisfies the multiple goals. To apply the goal programming technique. a priority structure for these goals. Given multiple (often conflicting) goals. and • the conduct of business travel programs. • the organization of and participation in seminar programs. By changing priorities of goals. OPERATIONS OF A NATIONAL TOURISM OFFICE Goal programming is a quantitative technique which can be used by tourism officials to compare the value of implementing different tourism marketing strategies. All of these marketing program alternatives are designed to stimulate the flow of travelers to a particular region or destination. Osteryoung 1973. (Keown and Taylor 1978. • the sponsorship/assistance of travel missions. • the implementation of public relations programs.SEELY. in order to apply institutions' resources in the most efficient manner. there is no consensus concerning the exact nature and thrust of the marketing programs to be pursued. Unfortunately. it is imperative that national tourist offices utilize analytical methodologies which allow for a systematic appraisal of the goal attainment potential associated with proposed tourism market program alternatives. IGLARSH. More specifically. National tourist office officials are typically confronted with multiple goals (Arthur D. • the organization and conduct of familiarization tours. Only rarely can all goals be achieved simultaneously. and organizational constraints the policy maker can test the effect of changes before they are implemented. However. can assist and support its leisure and travel industry is by sponsorship of marketing programs. usually through its national tourist office. Ramsey 1976). it quickly becomes clear that limited resources generally prevent a national tourist office from fully pursuing each alternative. Thus. the tourism official determines the relative importance of various organizational goals. Among marketing program alternatives open to the national tourism organization are the following: • the conduct of direct advertising campaigns. budgetary limitations. Goal programming is a form o f linear programming which allows for the consideration of multiple goals. the minimization of positive and negative deviations about the goals are ranked by the decision maker according to the latter's assigned 1980ANNALSOF TOURISM RESEARCH VII(3) 355 . and organizational constraints. Lun 1978.

1976). To determine the values for the resource variables. as opposed to truly evaluating an organization's activities by attempting to measure a program's impact within the environment in which it is implemented. It was further determined that agency program contribution to the U. Thus an "exposure index" was developed which 356 1980 A N N A L S OF F O U R I S M R E S E A R C H VII(3) . It is very similar to the simplex algorithm for the solution o f linear programming problems (Lee 1972. Moreover. contribute to the maximum extent possible. For USTS. This conclusion was arrived at based upon a review of the authorizing legislation of the USTS. contribute to the maximum extent possible. The first step is to identify the key goals of the organization. Generally. the highest priority was assigned to the objective of contributing to the greatest extent possible to the balance o f payments position of the United States. the program evaluation process of these organizations is one in which programs are reviewed on an individual--and not comparative--basis. This is a departure from the typical evaluation process undertaken by most national tourism offices.GOAL PROGRAMMING levels of importance. balance of payments position could best be measured by evaluating the degree to which certain marketing program messages/results are exposed to certain tourist groups. to the balance of payments position of the United States. considered here are the marketing activities of the United States Travel Service (USTS). Goal programming requires that all strategies/programs be evaluated in terms of the priority structure specified by the decision maker. contribute to the maximum extent possible. b. T H E CASE OF T H E U N I T E D STATES T R A V E L SERVICE To illustrate the application of goal programming to tourism planning. a simplex algorithm for goal programming is implemented. to international goodwill and understanding (USTS 1979). and c. The goal programming simplex algorithm is an iterative algebraic procedure in which successive solutions are developed in a systematic pattern until the optimal solution is reached. it is quite c o m m o n for tourism program value to be determined through the implementation of a program budget analysis. Lower priority tourism goals are considered only after the desired results are achieved for the high priority goals. to the health and well-being of the American people. Subsequent analysis determined that among the three goals listed. the International Travel Act of 1961. these are: a.S.

. The total audience was divided by the previous year's budget allocation for public relations programs to obtain a measure of exposures per marketing dollar spent. As an illustration of the calculation of an exposure index. This is the exposure index of the foreign public relations program. The nonnegativity constraints are included just as in any linear programming model. a set o f goal constraints must be specified.. Since the different marketing program alternatives had not been measured in terms of exposure in the past. consider the foreign public relations program o f the USTS. In this regard. The xi's correspond to the various marketing programs making up the constraint. each of 12 program alternatives was reviewed in terms of its effectiveness in reaching (directly or indirectly) certain tourist groups. The previous year's readership o f the written articles was estimated from communications industry data and readership surveys. xi." Such a criterion was established as the basic norm through which marketing program e f f e c tiveness could be measured. The variables. Such data was determined based upon interviews conducted with management personnel of USTS during May 1979. as a tourist destination. The right hand side o f the goal constraint is the target value for the goal.. The deviation variables represent the possible underachievement or overachievement of the goal. & EDGELL measures "exposures per marketing dollar spent. T o formulate the goal programming model. This program generates newspaper and magazine articles devoted to favorably portraying the U. The remaining eleven exposure indices were calculated in similar manners. 12 correspond to the funding allocations for the twelve marketing program options shown in Table 1. The goal constraints are presented in equation form in Table 2 of the appendix.SEELY. Future goal programming efforts involving USTS activities are planned to be based on quantitative data collected in the field. Each goal constraint is an equation whose left hand side is a linear combination of the xi's plus positive and negative deviation variables di+ and d i.S. IGLARSH. 1980 ANNALS OF TOURISM RESEARCH VII(3) 357 . These are the critical short term goals which guide the operation of the organization.. i = 1. both qualitative and quantitative data was used to arrive at the "exposure indices" presented in Table 1.

GOAL PROGRAMMING Table 1 Tourism Marketing Program Options and their Effectiveness Marketing Program Option XI: X2: E3: X4: X5: X6: XT: X8: X9: XIO: XII: XI2: Advertising Public Relations Familiarization Tours (Trade Oriented) Assistance for Travel Missions Trade Smainars Business Travel/Conventions "Visit U.S. Committee" Consumer Inquiry Program Tour Development Literature Distribution for Trade Groups Familiarization Tours (Tourist Oriented) Literature Distribution for Tourists "Exposure Index" 18-1 50-1 75-1 2-1 35-1 i0-i 15-1 30-1 40-1 75-1 75-1 75-1 358 1980 A N N A L S O F T O U R I S M R E S E A R C H VII(3) .A.

6 X3 x5 X6 +XII + d~ .1 9 X7 X8 X9 XI0 +XI2 + + dlo .06 8 + d9 .d4 = C o n s u m e r Budget Funding Constraints X1 X2 + d 5 ..d+ = . 8 5 2 Trade Strategy Constraint + X 3 + X 5 + X 9 + XI0 + d3 . 13 1980 A N N A L S OF TOURISM RESEARCH VII(3) 359 . d~ O..825* Exposure Constraint X1 + 50X 2 + 75X 3 + 2X 4 + 35X 75Xll 5 + IOX 6 + 15X 7 + 30X 8 + 40X 9 + 75xi0 + + 75X12 + d 2 . i = i . i constraints 12 0. 2 13 (in millions of dollars) Non-negativlty x.d + = l ... 3 7 + d8 .d 3 = Trade Budget Consumer Strategy Constraint + X1 + X 2 ~ X8 + X l l + X12 + d 4 .. & EDGELL Table 2 M o d e l Constrainls Budget Constraint + + X 2 + X 3 + X 4 + X 5 + X 6 + X 7 + X 8 + X 9 + XIO + Xll + X12 + d I . IGLARSH..* _ + d6 .01 + + dll .dlo = .d+ = . 0.dll + d12 d = • 36 + 12 = .d +5 = 3. d~ i = i..d + = 1 2 2 .SEELY.25 + d13 .d + = ..d I = 6.d+ = 1.

second priority to minimizing the underachieve360 1980 ANNALS OFTOURISM RESEARCH Vlli3J . The objectives for the trade and consumer strategy constraints are not to underfund these programs. The goals for these constraints are the minimum amounts of funds that must be allocated to effectively reach each of these groups. impact in various tourism markets. In the case of multiple goals this often means that all goals cannot be realized exactly. and not the funding allocation variables. This is represented in the objective function by minimizing d I d l . The budgetary objective for the USTS is to allocate exactly the funds budgeted. The goal programming simplex method considers lower priority goals only after higher priority goals have been satisfied as well as possible. The right hand side is the goal for the coming year. The exposure constraint has the left hand side equal to the number of exposures generated by the given funding allocations. The exposure objective is to achieve at least the exposure levels realized during the preceding twelve month period. With these thoughts in mind. the sum of the deviations from the budgetary goal. the negative deviation from the goal. the decision maker must specify a priority structure for the attainment of these goals. This figure is the exposure level realized during the previous twelve month period. since lower allocations would result in little if any impact on the marketing programs. The trade strategy constraint and consumer strategy constraint refer to marketing programs aimed at reaching major tourism groups--namely the tourism trade organization and the actual tourist.825 million dollars for the coming year.85 million exposures. considered here is the following objective function: rain Z = PI (di + d~) + P2(d~ + d6 + d 7 + d~ + d~ + dio + dll + d12 + di31 + P3d2 + e4d3 + Psd4. The budget constraint shows that the total funding of marketing program options has a budget allocation of 6. The objectives for the funding constraints are to minimize underachievement of each of the funding goals. 122. This objective function gives first priority to allocating exactly the amount of funds budgeted. if any. The objective function in the goal programming model contains the deviation variables only. The funding constraints have goals which are the minimum amounts that must be allocated to each marketing alternative in order to achieve reasonable impact levels. It was felt by the IJSTS personnel that allocations o f less than these amounts would result in little. Thus it is hoped to minimize d 2. Thus it is intended to minimize d 3 and d 4.GOAL PROGRAMMING For the USTS model there are thirteen goal constraints. Finally.

This objective is given by: min Z = P1 (dl+ dl)+ P2(d5 + d~ + d 7 + d 8 + d~ + d l 0 + dil + d12 + di3) + P3d2 + P4d4 + Psd3. in fact the exposure level was more than doubled. i = 1. public relations was allocated $355. When trade strategy had higher priority than consumer strategy. In both cases the first priority budget constraint was satisfied. It was felt by USTS personnel that the ordering established in the first objective function best reflects the priority structure of these variables as they exist at the present time. P1 is the highest priority.SEELY. 1980 C N N A L S OF T O U R I S M R E S E A R C H VII(3) 361 .000 over the minimum funding goal and trade seminars were allocated $190. the consumer strategy was allocated exactly its budget.000 over the minimum funding goal. 5 denote the priority levels associated with each goal. When the consumer strategy had fourth priority and the trade strategy the fifth priority.000 under budget.. the following budget allocations shown in Tables 3 and 4 were assigned by the goal programming simplex technique.. third priority to minimizing the exposure goal. but the trade allocation was $285. Using the two priority structures. Similarly. Obviously.000 under budget. Thus in both cases the second priority constraint was satisfied. However. The constraint goals were determined during discussions with USTS personnel during May 1979. the priorities for the trade and consumer goals are reversed. The Pi. In both cases. and last priority to minimizing underachievement of the consumer goal. but in different ways.000 over the minimum funding goal. For another possible objective function. the priority ratings . when the consumer strategy had higher priority than the trade strategy. The third priority objective o f achieving at least the exposure levels realized in the previous year was satisfied in both cases.'order can be altered depending on the thinking of the tourist official as conditions change. I G L A R S H .. fourth priority to minimizing underachievement o f the trade goal.. each marketing tool received at least its minimum funding goal. when the trade strategy had fourth priority and the consumer strategy had fifth priority. the trade strategy was allocated exactly its budget. Each priority structure realized a different exposure level. but the consumer allocation was $285. & E D G E L L ment of funding for each marketing tool. public relations was allocated $545.

3 Allocation 6.8 (over) 5 1.06 .85 5 2 267.25 1.545 (over) .205 .2 0 122.06 .36 .25 1.01 .095 0 .825 3 1.36 .825 3 I .01 .i .715 (under) 362 1980 A N N A L S OF T O U R I S M R E S E A R C H VII(3) .GOAL PROGRAMMING Table 3 Budget Allocations under Goal Priority Structure with Consumer Strategy having Higher Priority than Trade Strategy Priority I: Priority 2: Priority 3: Priority 4: Priority 5: Constraint Budget XI X2 X3 ) XII X4 X5 X6 X7 X8 X9 Xl0 XI2 Exposure Consumer Trade Allocate Minimize tool Minimize Minimize Minimize exactly the amount of funds budgeted underachievement of funding for each marketing underachievement of exposure goal underachievement of consumer strategy goal underachievement of trade strategy goal Goal 6.2 0 .i .

IGLARSH.I .25 1.3 0 .25 ( o v e r ) .355 (over) .SEELY.2 . & EDGELL Table 4 Budget Allocations under Goal Priorily Structure with Trade Strategy havinR Higher Priority than Consumer Slralegy Priority Priority Priority Priority Priority i: 2: 3: 4: 5: Allocate Minimize Minimize Minimize Minimize exactly the amount of funds budgeted underachievement of funding for each marketing tool underachievement of exposure goal underachievement of trade goal underachievement of consumer goal Goal 6.95 (over) 2 4.06 Constraint Budget XI X2 X3 ) XII X4 X5 X6 X7 X8 X9 XI0 XI2 Exposure Trade Consumer Allocation 6.01 .I .825 3 1.25 1.85 2 5 264.2 0 122. one o f the goals was not satisfied (as 1980 ANNALS OF TOURISM RESEARCH VII(3) 363 .715 (under) Thus each priority structure produced a different set o f allocations for the marketing tools.36 .3 0 0 . Also in each case.36 .01 .825 3 I .

GOAL P R O G R A M M I N G shown in table 4). and training programs are reviewed separately. There is little effort made to develop measures of effectiveness that can be applied to all programs or to evaluate how the programs interact together toward the attainment of organizational goals. Implementing goal programming in the planning process of tourism organizations will not be an easy task. This view promotes the development of system wide evaluation measures. Advertising. Numerical constants such as the exposure indices must be updated to reflect new information obtained. However. the majority of public and private sector tourism organizations evaluate program options on an individual basis. the program effectiveness of tourism organizations can be measurably raised in the future. New budgeting information must be incorporated in the model. the analysis does give the decision maker the chance to consider various priority structures and their corresponding budget allocations and then to decide on which course of action to follow. CONCLUSIONS The preceeding analysis has shown that the complex planning situation faced by tourism organization officials lends itself to the utilization of goal programming. The model must reflect the dynamic nature of the corporation. and the degree to which these goals are satisfied by various program alternatives. the goal programming model must be periodically updated. through which all programs can be evaluated with respect to a common criterion. Quantifiable organizational goals must be established and given relative priorities. The goal programming model then allows the planner to determine the effects of changes in the priority structure. and changes in program funding on the attainment of organizational goals. The use of goal programming encourages the management team to adopt a systems theoretic view of the planning process. seminars. At present. if the personnel of these organizations are willing to devote the needed level of resources and suport to conduct this type of analytical effort. New goals may be introduced and current goals modified or eliminated. public relations. changes in the organizational budget. By implementing such a technique tourist office personnel can more systematically review the nature and relative importance of the organization's goals. [Z I~ 364 1980 ANNALS OF TOURISM RESE-ARCH VII(3~ . Because of the rapidly changing organizational environment. such as the exposure index. The appropriateness of the goals and their priority structure for the tourism organization must be evaluated. However.

Columbia S. and Taylor. 1978 Multiple Objective Budgeting Models: A Simulation. In Multiple Criterion Decision Making. 1978 Integer Goal Programming Model for the Implementation of Multiple Corporate Objectives. pp. Journal of Economics and Business 28(3): 171-180.M. 1976 A Framework for the Interaction of Corporate Value Objectives.Final Report. Ramsey.S.C. Corporate Performance Objectives. J. 1972 Goal Programming for Decision Analysis.. Government Printing Office. Washington D.: University of South Carolina Press. Vital Speeches 42(24): 756-757. IGLARSH. Lee. Little. D. Journal of Business Research 6(3): 221-235. 1976 Linear Optimization for Management. and Corporate Strategy.W. Address before the National Conference of Lieutenant Governors. Zelney. Inc. The Accounting Review Llll(l): 61-76. 1973 Multiple Goals in the Capital Budgeting Decision. 1978 National Tourism Policy Study . 447-457. New York: Petrocelli / Charter. & EDGELL BIBLIOGRAPHY Arthur. J. J. Lun.: U. Philadelphia: Auerback Publishers. Ill.S. eds.T. A.L..C.SEELY. Submtned 8 September 1979 Revised version submitted 30 January 1980 Accepted 20 March 1980 Refereed anonymously 1980 ANN&LS O FT O U R IS M RESEARCH VIl(3) 365 . Cochrane and M. Keown. B. USTS 1979 America's Best Kept Secret: The Tourism Industry.J. W.E. S. Osteryoung.

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