Contemporary Destination Governance: A Case Study

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Ötztal
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 Case 8

ÖTZTAL

Abstract: With more than 3.6 million overnights in 2012, Ötztal is the
strongest destination in Tyrol, Austria. The destination encompasses very
different geographic conditions suitable for different kinds of tourism
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offers. This results in a very strong winter season in the higher regions
and a more seasonally balanced set of tourism offers in the lower regions.
Until 2006 the destination was split into five parts, managed by five inde-
pendent DMOs. After merging these DMOs, the destination management
faced issues around how to integrate distinct stakeholder interests regard-
ing tourism development. The case highlights how different actors are
integrated into destination governance. One focus is on the destination
network and relationships between different actors, while information
exchange between different actor categories and influences on decision-
making are also emphasized. Keywords: Ötztal, merger, relationships,
cooperation, network, governance

INTRODUCTION

Due to the number of actors and institutions involved in delivering a tour-

ism product to the market, complexity is a major issue for tourism manage-
ment. The value chain of a destination consists of numerous, sometimes
competing, service providers linked together by different kinds of relation-
ships (e.g., strong vs. weak, formal vs. informal). Social network theory
offers fertile concepts for investigating destinations. The flow of resources
in a network is determined by network structure and content. The content

Contemporary Destination Governance: A Case Study Approach

Bridging Tourism Theory and Practice, Volume 6, 93 104
Copyright r 2015 by Emerald Group Publishing Limited
All rights of reproduction in any form reserved
ISSN: 2042-1443/doi:10.1108/S2042-144320140000006024
 94 Contemporary Destination Governance

of a relationship, its governance, and the pattern of a network emerging

from connecting ties are key areas for explaining network development
(Hoang & Antoncic, 2003).
Network content refers to the role of interpersonal and interorganiza-
tional relationships that grant access to resources and to relationships’
reputation and signaling effects as well. The governance of networks is
strongly characterized by social phenomena such as power and trust, rather
than legal issues. These elements, often underestimated, play a major role in
creating cost advantages for entrepreneurs. The structure of a network is
“defined as the pattern of relationships that are engendered from the direct
and indirect ties between actors” (Hoang & Antoncic, 2003, p. 166). In this
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respect, relationships between actors determine the flow of resources in a

network. Ötztal was managed by five DMOs until 2006, when new tourism
legislation forced them to merge. Consequently, the destination network
incorporated a substantial number of new actors, but these had insufficient
relationships between them. The case at hand therefore focuses on the rela-
tionships between tourism network actors and how these relationships are
managed. The outcomes regarding the structure of the destination network
are of further interest.

NETWORK FORMATION AND DESTINATION MERGER

Ötztal is one of the most successful destinations in Tyrol, selling more

than 3.5 million overnights in 2012, of which more than two million occur
in winter. Spanning 65 km of length, Ötztal is the longest alpine valley in
the Eastern Alps. The villages of Haiming, Sautens, Oetz, Umhausen
(including Niederthai), Längenfeld (with Gries and Huben), Sölden, Vent,
and Obergurgl-Hochgurgl are located on different altitude levels, with
Obergurgl-Hochgurgl being the highest at 1,950 m.
Ötztal separates the Stubai Alps (Figure 1) in the east from the Ötztal
Alps in the west. Innsbruck, the capital city of the province Tyrol, is located
50 km to the east and can easily be reached via Highway A12. Ötztal
depends heavily on tourism, while other industries including construction
and transport companies are located nearby the northern entrance of the
valley. Starting at the entrance, the villages of Haiming, Sautens, and Ötz
focus mainly on summer tourism. Tourists may find a great variety of bik-
ing and hiking possibilities. One can also find adventure services like rafting
or canoeing and spa and wellness offers such as the Aqua Dome with its
 Ötztal 95
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Figure 1. Locating Ötztal

thermal baths in Längenfeld. Higher altitudes in the valley are dedicated to

skiing and winter outdoor activities. During the last few decades the desti-
nation strengthened its position in this respect by making large investments
in cable car construction. It also promotes an offer of ideal winter sports
conditions. Ötztal hosts the opening of the FIS Alpine Ski World Cup in
late October every year. It became quite famous worldwide in the 1990s,
when the “Ötzi” was found, which is a well-preserved 5,300-year old natu-
rally preserved mummy. However, the body was found 92.5 m across the
Italian border, and therefore one can see the “Man out of the Ice” in the
South Tyrol Museum of Archaeology in Bolzano, Italy.

Historical Background and Development

During the mid-19th century alpine tourism began to prosper in Ötztal. One
of the pioneers was a “glacier parson” named Franz Senn. Born in 1831
close to Längenfeld, he was one of the originators of guided mountain tours
 96 Contemporary Destination Governance

in Tyrol. Numerous alpine huts were set up in the course of the ensuing
developments. In 1931 the tourism development of Obergurgl commenced,
and the village received widespread attention when a Swiss scientist,
Auguste Piccard, had to perform an emergency landing there in his strato-
spheric balloon. In 1933 tourism in Ötztal faced a setback due to economic
sanctions by the German national socialist government, which imposed a fee
of 1,000 DM per border crossing. This led to a major decline in the most
important German tourism segment. Following World War II tourism
started to prosper again, resulting in its emergence as the region’s most
important economic sector. The first cable car operating from Sölden to
Hochsölden was opened in 1948. It was the third cable car in Tyrol. The
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opening of the first two cable cars in the Kühtai valley marked the beginning
of technologically supported skiing. In 1960, after finalizing the construction
of the Timmelsjoch High Alpine Road, the construction of the hotel village
Hochgurgl and the preparation of the Angeralm hillside, Ötztal offered a
new modern skiing area, meeting the rising tourism demand (Ötztal
Marketing, 2013). Winter tourism showed a steady increase from 323,834
overnights in 1961 to over 2.5 million in 2013. During the 1990s overnights
went through a decline, dropping from approximately 2.1 million down to
about 1.8 million. Winter tourism outpaced summer tourism at the begin-
ning of the 1980s.
Summer tourism grew from 533,971 overnights in 1961 to approximately
one million in 2013. Peaks in Ötztal’s summer tourism attraction were
reached in the early 1980s, and again during the early 1990s when the num-
ber of overnights reached approximately 1.3 million. The history of Ötztal
as a destination has been characterized by a number of challenging events,
as people faced many natural catastrophes. Avalanches, mudflows, flood-
ings, and rockfalls threatened the life of locals and tourists and became part
of Ötztal’s historical development (Ötztal Marketing, 2013). Tourism infra-
structure in Ötztal is well developed. Following the first cable car construc-
tions after World War II, Sölden became particularly famous for the hosting
of several world and national cup ski championships. Cable cars were built
in 1948 in Sölden and Hochsölden and in the glacier area around
Rettenbach and Tiefenbachferner as well at the end of the valley, which
have been accessible since the 1970s. The glaciers offer a large variety of
easy, medium, and demanding downhill slopes, and are connected with a ski
tunnel. Although the glaciers are an attractive natural sight for winter and
summer tourists, they also caused severe damage in the past. For example,
in 1987 a flood caused by snow melt and additional heavy rainfalls destroyed
bridges, streets, and houses close to the Ötztal River. Thirteen people lost
 Ötztal 97

their lives. Besides having a sports image, Ötztal has also created additional
segments in the tourism value chain. For example, spa areas and biking
trails are important supply-side investment areas (Schwärzler, Lackner, &
Gager, 2009).
Haiming is located at the valley entry with approximately 4,400 inhabi-
tants and at an altitude of 670 m. Of the total workforce, 26.8% are found
in the tourism sector, while 22.3% are in other trades (Statistik Austria,
2009). Sautens, which is marketed as the “gateway to Ötztal” is smaller
with approximately 1,400 inhabitants and located at an altitude of 812 m.
It is a popular village for families seeking to enjoy nature in a low mountain
range area. Here, 21.1% of the workforce is found in the tourism sector.
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Agriculture and forestry are also major sources of income, where 17.2% of
the local workforce is employed. Ötz, at the same altitude as Sautens, is
also a two-seasonal village, offering the Piburger Lake as a major summer
tourism attraction. In addition, the Acherkogelbahn cable car can transport
tourists in only eight minutes up to a height of 2,020 m to Hochötz, where
a wide network of hiking paths is provided. Interestingly, one-third of the
local workforce is employed in local construction companies, followed by
only 14.2% in the tourism sector.
Umhausen is located at 1,036 m with approximately 3,100 inhabitants
and shows the same pattern in terms of workforce distribution. Their major
attraction is the Ötzidorf, a theme park displaying the Ötzi mummy and
showcasing items from the Neolithic epoch. Längenfeld is the largest village
in Ötztal with approximately 4,350 inhabitants and is located at 1,179 m. Its
geographic shape is long and narrow along the valley for approximately 20
km. It offers a large variety of hiking and biking trails. The thermal baths at
the Aqua Dome were built in 2004 and turned out to be a major tourism
attraction benefiting the destination as a whole. Sölden is a winter sports
region at an altitude of 1,377 m and with approximately 3,400 inhabitants.
With more than 15,000 beds, the destination is a major attraction during the
winter season. Slopes spanning 150 km can be accessed via 39 cable cars.
During summer 99 alpine and mountain huts attract hikers and mountain
bikers. In August Sölden organizes the annual Ötztal marathon competition
for bikers who have to master 238 km and 5,500 m in differing altitudes.
They start in Sölden (1,377 m) and ride over the Jaufen Pass (2,090 m) and
Timmelsjoch Pass (2,509 m). Sölden is heavily dependent on tourism, which
employs 45.8% of the total workforce. As a municipality it includes other
villages. Besides the very small village of Vent with 140 inhabitants,
Obergurgl and Hochgurgl are important winter sports areas close to the bor-
der of South Tyrol and are on the way to the Timmelsjoch mountain pass.
 98 Contemporary Destination Governance

Snow is guaranteed, because they are located at an altitude of approximately

2,000 m.

Products, Services, and Market Situation

Ötztal offered approximately 17,900 beds during the 2011 12 winter and
15,200 beds during the summer in 2012, of which 6,200 are provided by five-
and four-star hotels in winter. The occupancy rate of the five- and four-star
hotels is quite high, with 75% in winter but only 38% during summer.
The three-star hotels achieve 59% occupancy rates in winter and 25% in
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summer. The one- and two-star hotels/pensions achieve 47% in winter and
16% in summer (Tiroler Landesstatistik, 2012b).
The traditional core products of Ötztal are skiing in winter and
hiking and biking during summertime. Overall, Ötztal has enhanced its
value chain with an adventure park named Area 47 and a Kids’ Park with
5,000 m2 playground at the hillside, underlining Ötztal’s image as an
adventure summer destination for younger tourists. Area 47 is an outdoor
area that is open from April to September. This adventure park offers out-
door activities with rafting, canyoning, climbing, or caving attractions; a
water area with a lake, waterslide park, and cliff diving; and an event area
where concerts and sports events take place. In addition, the clientele of
families and relaxation-seeking tourists has been growing since the thermal
baths in Längenfeld opened in 2004. The thermal spring baths were histori-
cally documented in the 16th century, but in the 1970s the springs dried
out. Drilling initiatives for water were successful in 1986. One was found at
1,865 m depth with hot thermal water. The paradox of finding hot water
on this altitude stemming from glacier melt created a marketing opportu-
nity. The Aqua Dome thermal bath is a modern architectural facility that
always allows tourists to view the mountainous surrounding. With the help
of the Ötztal Premium Card, the DMO offers an Ötztal summer package,
creating a product bundle of the main summer attractions such as Area 47
and family attractions including mini golf or the thermal baths (Ötztal
Tourismus, 2013).
The provision of cross-country ski slopes in the municipality of Sölden is
modest with only 16 km, while downhill skiers enjoy a great variety of
slopes. Sautens, Ötz, and Haiming created the family ski center Hochötz
and focus on family segments. The second family and beginner-oriented ski
area is Niederthai, a small mountain village located at a 1,500 m altitude
and offering approximately 4 km of slopes above Umhausen. Above them,
 Ötztal 99

the ski area of Kühtai, Austria’s highest winter sports village, is located at
2,020 m between Ötztal and the Stubai Valley and offers 44 km of ski slopes.
Sölden offers fun sports and attracts young winter sports tourists. Between
an altitude of 1,800 and 3,080 m, tourists may find 147 km of slopes with
guaranteed snow from November to May. Sölden offers many bars, with
various entertainment and après ski options. The ski area Vent, a small but
quiet ski area surrounded by glaciers, and Obergurgl-Hochgurgl offer
approximately 113 km of ski slopes with differing levels of difficulty (Ötztal
Marketing, 2013).
One of the major goals of the Ötztal DMO is to further strengthen the
summer season. Statistics show a steady growth of summer overnights. For
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example, between 2002 and 2011 it increased by 10.5%. The two main tour-
ist segments in summer are Germans and domestics, making up 50% and
10% of the market, respectively. Overnights increased from 3.4 million in
2008 09 to 3.6 million in 2011 12, representing 8.2% of the market share
in Tyrol. Tourist arrivals increased during the same period from 678,622 to
752,536. Of all these arrivals only 241,622 were summer tourists (Tirol
Werbung, 2012). In winter Ötztal attracts more than 2.3 million overnights.
Germans constitute the majority of the tourists for over 50%, followed by
the Dutch for approximately 12%. In the winter season the Russian seg-
ment is on the rise with 140,187 overnights, already accounting for a share
of more than 5% of the incoming market (Ötztal Tourismus, 2013). In 2009
Sölden was again number one among Tyrol’s top destinations in number of
overnights.

Governance

The following interpretation is based on interviews taken with various stake-

holders in the destination. Eight interviews were carried out, lasting 20 60
minutes each in German. Interviewees included hoteliers, politicians, cable
car owners, and other stakeholder representatives. Seven villages of Sautens,
Ötz, Umhausen, Längenfeld, Sölden, Vent, and Obergurgl-Hochgurgl
make up the destination Ötztal. Before 2006 each of these villages consti-
tuted individual destinations, each having its own tourism organization.
Since the mergers in January 2006 the DMO Ötztal has represented the
whole valley. As the second-largest DMO in Tyrol, the Ötztal Tourismus
DMO has a staff of approximately 80 employees. The yearly budget was $13
million (h9.8 million) in 2013. The DMO’s board consists of nine individual
members plus three co-opted representatives from the communities, as well
as two mayors. The presidents and two vice presidents are closely connected
 100 Contemporary Destination Governance

to the chief executive officer. Together with two divisional directors,

they are mainly responsible for the strategic management of the DMO. The
divisional directors also report to and inform all community-level institu-
tions, such as the registration offices or other local associations representing
community stakeholders’ interests (Figure 2).
The majority of the interviewees interpreted tourism as a major wealth
creator for the region. The focus of many actions is therefore on tourism
management and marketing issues. In contrast to winter tourism, there is a
high growth potential for summer. All the interviewees underlined the
importance of carrying out activities that might strengthen summer tourism
in Ötztal. One issue evident here is to overcome the different interests of the
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villages in the destination. Due to the geographic peculiarities, some villages

are more suitable for winter tourism and some are more suitable for sum-
mer tourism. Thus, the motivation to strengthen the summer season is dis-
tinct among actors from different regions in the destination. The summer
season was previously stronger during the 1970s, but in the 1980s and 1990s
it started to turn toward winter. The region must try to foster the summer
season again. According to one mayor, the major goal is to become an all-
year holiday destination.

Board of Members

President

Financial &
Assistance
& IT CEO HR
Assistance

Marketing Administration/
Product Registration
Communications Distribution
(Divisional Director)
Management (Divisional Director)

Events & Advertising Online

Exhibitions & Branding Content
Media Area 1 Area 2 Area 3 Area 4

Figure 2. The Structure of the Ötztal DMO

 Ötztal 101

A problem is the marginal motivation for strengthening the

summer season in the ski resorts. Pressure for a strong com-
mitment regarding the summer barely exists. The winter sea-
son is still working well (DMO manager).

Yes, currently we try to look at summer; however, we have

neglected this for the last fifteen years, but now we aim to
balance summer and winter fifty-fifty (tourism entrepreneur).

The interviewees indicated that quality instead of quantity-oriented

growth strategies should be fostered in future. The cable car company, for
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instance, follows the strategic goal of continuously enhancing quality by

constantly investing in its infrastructure.

We are seeking ongoing improvements in quality. When I

talk about improvements in quality I mean replacing old lift
facilities with modern ones, securing snow quality and snow
security by investing in snow making infrastructure, but also
enhancing and renovating the mountain gastronomy (cable
car company).

Leading tourism entrepreneurs such as the cable car company, the five
municipalities, and the DMO are perceived as the most salient actors in des-
tination governance. Entrepreneurs have been a major driver of tourism
and destination development in the past. One of the former founders of the
cable car company is described as a pioneer with great persuasiveness and
persistence in developing and implementing ideas. The cable car company’s
reputation still benefits from the early time. As a result, leading actors in
the destination, especially entrepreneurs, are monitored by other actors and
act as points of reference.

One of the engines driving tourism development in Sölden

and in the whole valley was our senior boss. Of course, he
could not achieve this alone, but he looked for partners, con-
vinced them and swore them into his ideas. Certainly, he was
a leading person. And regarding tourism development, we
still are one of the engines (cable car company).

The tourism industry does not display the same significance in every
village. For example, villages located nearer to the gateway of the valley are
 102 Contemporary Destination Governance

not as influential in formal terms, because the tourism sector is lagging

behind compared to other villages. Their influence in the DMO is weaker,
because they delegate a smaller number of officials to the board of mem-
bers. Stakeholders use different means for exerting influence, such as
knowledge and reputation. Financial power can exert influence, but plays
only a minor role in destination governance compared to knowledge and
reputation.

Power, knowledge and reputation are the most common

channels of governance in the destination. Money is power,
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and knowledge is power! (hotelier).

Money does not really impress … reputation matters and is

able to influence others (mayor).

Face-to-face communication is dominant in the destination. The small

villages and the considerably small number of inhabitants concentrated in
a larger area bring a great number of opportunities for informal conversa-
tions between a diverse set of actors such as at events and chance encoun-
ters in bars or restaurants. Thus, relationships are characterized as
informal in general and the destination network is described as densely
interlinked. Meeting regularly and building trust strengthen relationships
between actors with geographic proximity. This dense web of informal
interactions in the destination fosters trust and respect among the stake-
holders by spreading information in the destination. Information exchange
and coordination between a small number of leading actors is even stron-
ger. Some stakeholders still emphasize a need for fostering the creation of
trust between actors from the different villages forming the destination
since 2006.

I think the frequency of contact is very high, because you

often meet personally. I also think we have a very high basic
trust in each other, so we can trust in the quality in the hand-
shake of our partners and we don’t need any contracts in
order to achieve whatever. Basically you know who repre-
sents which point of view and what you have to do … So we
are in permanent contact and mutual trust plays a major role
here. I think we have this mutual trust and respect. This is
important (mayor).
 Ötztal 103

We got together … the merger of the DMOs to the Ötztal

DMO only took place in 2006 and in my opinion we still
need to establish a foundation of trust and I think this will
take a little time (DMO manager).
Relationships concerning prominent actors in the destination network also
show some formal dimensions. Formalization of relationships is specially
established to support the implementation of decisions made and succeeds
the informal coordination. As noted by an entrepreneur, “the smaller the
unit, the more we rely on handshakes and oral negotiations. The smaller
the unit, the more informal it is.” A further factor enhancing relationships
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is the personal tie. According to the interviewees, the destination is gov-

erned by very few actors who cover the agendas of various ties from their
personal networks. Actors follow common and individual interests, whereas
individual interest is more often ascribed to entrepreneurs.

Overall, there are no hierarchies, but some players in the des-

tination dominate decisionmaking processes because they are
more powerful than others. All in all, we are team players in
our region (cable car manager).

People usually act to fulfill their personal needs, and some-

times destination improvement can profit from this egoistic
behavior (tourism entrepreneur).
Decisionmaking processes are perceived very differently by the actors in the
destination, but generally suffer from the fact that stakeholders are not
creative enough. The DMO president commented that “… creativity should
be much higher, instead one looks at another area and copies this, but indi-
viduals’ impulses are missing … Only a few have their own ideas; the rest
just copy.” One challenge for the future is maintaining acceptance of the
tourism industry among the part of the population not employed or incor-
porated otherwise in tourism. The industry impacts on the society and ecol-
ogy in the valley. Thus, one goal is to make the benefit of tourism available
to as many stakeholders as possible.

So I see a problem occurring in the future due to a separation

into people benefiting from tourism and people not benefiting.
So it’s about acceptance. It can be as simple as some local boys
wanting to visit a disco, but not being allowed to enter because
everything is packed with tourists. This can lead to hostility
against foreigners. We have to be careful in this respect (mayor).
 104 Contemporary Destination Governance

CONCLUSION

The destination Ötztal shows several characteristics of the community model

and the constellation model of destination governance (Bodega et al., 2004;
Flagestad & Hope, 2001). Many different actors are both formally and
informally connected in this valley. Relational density is relatively high,
influencing destination development. Decisionmaking power is influenced
by a small number of entrepreneurial and political actors. Reputation and
power play major roles in decisionmaking, but also for the implementation
of new ideas in the destination. Many interviewees highlighted the fact that
creativity in terms of individual, local, differentiating product or service
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development is generally missing, and the majority of entrepreneurs or

owner-managers copy or imitate successful innovations in the destination.
Thus, the stimulation of local product development processes based on
market data about consumer behavior trends will be a key factor for the
ongoing success of the region.

QUESTIONS

1. What are the typical community destination model characteristics of

Ötztal?
2. How would you interpret the statements of the destination stakeholders
regarding the governance principles operating in the destination?
3. Ötztal is a very successful destination, which faces quantitative stagna-
tion, but is still attempting to relaunch and reposition its service and
product bundle. Describe the tourism development in Ötztal using the
destination life cycle model.
4. Knowledge is interpreted as power. What are the important power areas
that might constitute important sources of tourism development?
5. How can knowledge be stored in a destination?
6. What are the most important communication channels between stake-
holders in Ötztal?