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Identifying and Ranking the Determinants of Tourism Performance: A Global Investigation

A. George Assaf and Alexander Josiassen
Journal of Travel Research 2012 51: 388 originally published online 23 December 2011
DOI: 10.1177/0047287511426337

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426337
ssaf and JosiassenJournal of Travel Research
JTRXXX10.1177/0047287511426337A

Journal of Travel Research

Identifying and Ranking the Determinants 51(4) 388­–399

© 2012 SAGE Publications
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DOI: 10.1177/0047287511426337

Investigation
http://jtr.sagepub.com

A. George Assaf1 and Alexander Josiassen2

Abstract
After a prolonged period of growth, driven, in part, by an increasing number of affluent consumers, the international
tourism industry is now suffering the effects of a weaker world economy. These tougher market conditions have, in turn,
led to increasing competition. As a result, countries, their tourism industries, and tourism businesses seek to improve the
performance of the tourism industry and its constituents by vigorously promoting themselves to international tourists, cutting
costs, and identifying synergies in their tourism endeavors. In seeking to improve the tourism industry, the determinants
that affect tourism performance are of key interest to the stakeholders. A key obstacle toward improving performance is
the multitude of determinants that can affect tourism performance. The literature has yet to provide concrete insights into the
determinants of tourism performance and their relative importance. The present study addresses this important gap. We
identify and rank the determinants of tourism performance. We also provide performance measures of international tourism
destinations. The results are derived using the Data Envelopment Analysis (DEA) and bootstrap truncated regression models.
The study also discusses the implications of the findings and highlights their importance to both the academic literature and
the international tourism industry.

Keywords
tourism industry, performance determinants, destination ranking, DEA

Introduction determinants of tourism performance and ranks their relative

Tourism is considered one of the most important export
industries (Yong, Keng, and Leng 1993; Shahin and
Dabestani 2010) and it has been both a cause and beneficiary
of the prolonged period of economic growth seen in recent
decades. Given its growing economic and social importance,
stakeholders are now interested in determining what drives
the performance in the industry.1 Performance improve-
ments can substantially contribute to the success of strategic
plans for destination development. The rapid growth of the
industry has gone hand in hand with increasing diversifica-
tion and competition among (in particular neighboring)
destinations (Ritchie and Crouch 2003; Dwyer and Kim
2003; Enright and Newton 2005; IBISWorld 2009).
Consumer sophistication has also increased because of the
rapid growth of the Internet and the range of tourism prod-
ucts and destinations on offer. Further challenges that have
resulted from the global financial crisis, such as the decrease
in international travel and the widespread security and safety
fears, have also pushed destinations to focus more on
improving the performance of their tourism industry.
The purpose of this study is to identify the key factors or
determinants that contribute to industry performance. There
is a need in the literature for a study that identifies the
importance (Crouch and Ritchie 1999, 2005; Blanke and
Chiesa 2009). Across most industries, developing an under-
standing of the determinants behind superior performance
has been an ongoing quest of managers and scholars who
deal with strategy (Durand and Vargas 2003; Delmas, Russo,
and Montes-Sancho 2007). In fact, it is the analysis of per-
formance and its determinants that drive most studies in the
strategy literature (Venkatraman and Ramanujam 1986).
So far, the focus in the tourism literature has been on ana-
lyzing the competitiveness2 of the international tourism
industry (Crouch and Ritchie 1999, 2005). Private organiza-
tions also rank international tourism competitiveness using
the tourism competitive index, or tourism satellite accounts.
However, none of the existing studies test which determi-
nants affect tourism performance (Fuchs, Peters, and
Weiermair 2002; Wöber and Fesenmaier 2004; Cracolici,
1
University of Massachusetts–Amherst, MA, USA
2
Department of Marketing, Copenhagen Business School, Copenhagen,
Denmark
Corresponding Author:
A. George Assaf, Isenberg School of Management, 90 Campus Center
Way, 209 A Flint Lab, University of Massachusetts, Amherst, MA 01003
Email: assaf@ht.umass.edu

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Assaf and Josiassen
Table 1. Drivers of Tourism Performance
1st Driver: Tourism and Related Infrastructure
Number of hotel rooms
Number of five- and four-star hotels
Number of operating airlines
Airport density
Quality of airline services
Quality of airport services
3rd Driver: Security, Safety, and Health
Crime rate
Number of hospital beds
Corruption index
HIV/AIDS
5th Driver: Government Policies
Visa requirements
Openness of bilateral air service agreements
Time required to start a business
7th Driver: Labor Skills and Training
Education Index of the country
Level of staff training in the industry
Service-mindedness of employees toward tourists
Nijkamp, and Rietveld 2006). Even studies on tourism com-
petitiveness (Crouch and Ritchie 1999, 2005; Assaf, Barros,
and Josiassen, forthcoming) emphasize that ranking destina-
tions should be based not solely on their competitive advan-
tage but also on their actual tourism performance.
The present research aims to extend the literature in
three ways: First, we aim to identify the determinants of
tourism performance. Second, we aim to rank these deter-
minants based on their degree of contribution to tourism
performance. Finally, we aim to develop a global perfor-
mance index that can be used to assess and rank the tourism
performance of countries. Our sample involves countries
from all around the world. We use a two-step estimation
procedure. First, we develop the tourism performance
index with the Data Envelopment Analysis (DEA) boot-
strap methodology (Simar and Wilson 2007). Then, we
assess how this index varies with the different determinants
of tourism performance.
The remainder of the article is organized as follows: First,
we present the research design and analysis. Then, we elabo-
rate on the methods and the data. Third, we present the
results, and finally we discuss the main findings and provide
directions for future studies.
Research Design and Analysis
Identification of the Determinants
of Tourism Performance
In an initial step, we developed a list of determinants with
the potential to affect tourism performance. The list was
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389
2nd Driver: Economic Conditions
Unemployment rate
GDP per capita
Government expenditures on the tourism industry
4th Driver: Tourism Price levels
Ticket prices
Fuel price levels
Hotel price index
6th Driver: Environmental Sustainability
Carbon dioxide emissions (Co2) per capita
Environmental performance
Stringency of environmental regulation in the tourism industry
8th Driver: Natural and Cultural Resources
Number of World Heritage natural attractions
Protected areas
Number of World Heritage cultural sites
Number of international fairs and exhibitions
Creative industries exports
informed by two sources: (1) literature review and (2) expert
opinions from the industry. As stated above, the existing
literature (academic and industry) does not provide a com-
prehensive list of determinants that drive tourism perfor-
mance. We were able to adapt some determinants from
related literature streams such as the competitiveness litera-
ture (Crouch and Ritchie 1999). The literature suggests that
“starting with categories identified in the literature” (Srnka
and Koeszegi 2007, p. 37) is useful in the process of catego-
rizing such qualitative data. Specifically, we developed an
initial classification on the basis of an interdisciplinary lit-
erature review (e.g., Crouch and Ritchie 1999). The classifi-
cation that was based on the academic and industry literatures
yielded six broad drivers of tourism performance. Each
driver includes a set of determinants that are potential
sources of tourism performance.
In light of the paucity of research in the area, we followed
up with in-depth interviews to support the research purpose
at hand. We conducted 45-minute in-depth interviews
(Kvale 1996) with seven experts in international tourism.
Semistructured interview guides (Marschan-Piekkari and
Welch 2004) were developed, which enabled the interview-
ers to adapt to each respondent and explore respondents’
answers in detail (Patton 1990). The respondents mentioned
a total of 30 determinants underlying tourism performance,
which we subsequently analyzed for content. The set of
determinants identified by the respondents closely over-
lapped the set identified in the literature review and also led
to the development of two new drivers. Overall, we ended up
with eight drivers, listed in Table 1. The following section
elaborates in detail each of the drivers.
390 Journal of Travel Research 51(4)
Drivers of Tourism Performance
Thus, our classification scheme comprises eight broad driv-
ers of tourism performance. Each driver is composed of
several determinants that can affect tourism performance.
We briefly discuss these drivers on the basis of both the
relevant literature and exemplary statements from the
qualitative study.
Driver 1—Tourism and related infrastructure. A number of
authors have cited the infrastructure base of a country as a
source of tourism attractiveness (Khadaroo and Seetanah
2007). There is also a positive link between the size and
quality of tourism transportation resources (ICT, ports,
roads, airport, and railroads) and the intention of a visitor to
return to a certain destination (Faulkner, Oppermann, and
Fredline 1999; Berli and Martín 2004). Areas with poor infra-
structure frequently have low-quality tourism and might be
unable to meet the demand in high seasons (Briassoulis 2002).
Most of the experts in our interviews argued that this
driver is an important determinant of tourism performance as
the ease of tourist movement within the country is affected
by the quality of roads, railroads, ports, and airports. The
literature also seems to support this argument (Prideaux
2000). In Table 1, we list the items that were identified. They
reflect both the size and quality of the infrastructure.
Driver 2—Economic conditions. Factors related to the eco-
nomic development and stability such as employment, and
income levels have been found to be strong determinants of
performance across several industries (Li 1997; Sun, Hone,
and Doucouliago 2003). Tourism also seems to be sensitive
to economic growth and macro-economic stability (Naude
and Saayman 2005). Several experts in our interviews
stressed the importance of basic economic conditions to the
success of the tourism industry and its actors. Supporting
this view, a number of studies have found significant differ-
ences in tourism development between developed and devel-
oping economies (Jenkins and Henry 1982; Tosun 2001). A
strong economy can encourage more foreign investments in
the industry, and it also enables more government support.
Driver 3—Security, safety and health. Research indicates that
security and safety levels influence tourism demand (Harper
2001; George 2003). Studies on return visitation also indicate
that tourists are likely to be deterred from traveling or return-
ing to dangerous countries or regions that have security prob-
lems (Alegre and Cladera 2006). For instance, when the tragic
events of September 11 occurred, international tourism was
greatly affected and travelers cancelled planned visits across
the world due to perceptions of increased risk (Akama and
Mukethe Kieti 2003). One of the experts in our interviews
mentioned that “almost regardless of other promotion efforts,
tourists actively avoid destinations with high crime rates.”
The ease or difficulty of access to improved health and
hygiene resources can also impact tourism demand (Cossens
and Gin 1994; Carter 1998). Tourists want to feel safe and
comfortable when they are at a destination. This issue
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became particularly important following recent scares such
as SARS, bird flu, and H1N1 flu which pushed several gov-
ernments to focus on the health risks associated with travel
and tourism.
Driver 4—Tourism price competitiveness. It is widely
accepted that the number of tourists is strongly affected by
the price competitiveness of a particular destination. This
issue is also widely established in the economic literature,
which argues that tourism demand is relatively responsive to
price factors. When selecting a destination, tourists consider
the price to get to the destination and the cost of living at the
origin relative to substitute destinations (Dwyer, Forsyth,
and Rao 2000). The intention to return to a destination can
also be affected by the prices experienced by tourists in their
previous visits (Barros and Machado 2010). In our inter-
views, the experts often mentioned price as an important
determinant of the willingness to visit.
It is possible to argue that the determinants identified by
the respondents are important indicators of price competi-
tiveness. For instance, when exchange rate rises, the tourism
price competitiveness falls. Fuel price, ticket price, and hotel
price are also important determinants of tourism expendi-
tures and can affect the tourist’s choice of a particular
destination.
Driver 5—Government policies. All respondents agreed that
government policy and regulation influences the tourism
performance of a particular destination and that it is an
essential stakeholder in terms of creating the conditions that
lead to the development of a successful tourism industry.
The literature seems to support the argument that govern-
ment policies may drive tourism development and may pro-
vide a general setting that actively encourages growth and at
the same time removes unnecessary restrictions or burdens
(Jenkins and Henry 1982; Holden 2003). Effective govern-
ment policies would also benefit the industry in terms of
attracting international investments, and facilitating the
movement of tourists in and out of the country (Crouch and
Ritchie 1999). We note that some studies outside the tourism
literature also found a positive link between effective gov-
ernment policies and industry performance (Jacobsson 1991;
Das and Ghosh 2006).
Driver 6—Environmental sustainability. Most experts seem
to agree that sustainable tourism development has become a
strategic goal for world-class destinations. Major destina-
tions are seeking preservation for future generations and
exploring sustainable development strategies and techniques.
The literature also seems to support the suggestion that envi-
ronmentally sustainable destinations can positively affect
tourism performance (Andereck et al. 2005). The interviews
indicated that tourists exhibit increasing environmental con-
scientiousness when shopping for tourist destinations. Gov-
ernments are now seeking sustainable tourism development
since it is critical to the conservation of the natural environ-
ment. Sustainable tourism can also help improving the image
of a particular destination (Hassan 2000).
Assaf and Josiassen 391

Gov. expenditure

Economic Conditions GDP per Capita Visa Requirements

Unemployment rate Government Policies Start-up Time

Air Service agreements
Number top hotels

Number of airlines CO2 Emissions

Environmental
Airline serv. qual. Env. Regulations
Sustainability
Infrastructure Airport serv. qual. Env. Performance
Hotel rooms
Service mindedness
Airport density Tourism Performance Labour Skills and
Staff Training
Training
Crime rate General Education
Corruption index
Security, Safety, and Creative Industries
Health HIV/AIDS
Natural Attractions
Number Hotel Beds Natural and Cultural
Cultural Attractions
Resources
Ticket Prices Protected Areas
Tourism Price Level Fuel Prices Fairs and Exhibitions
Hotel Prices

Figure 1. The proposed framework

Driver 7—Labor skills and training. It is widely recognized
across many industries, including tourism, that superior
labor skills is an important source of competitive advantage
for business (Bird 1995). Training is also essential in deliv-
ering the strategic objectives set by managers in the industry
and it plays an important role in improving the knowledge,
skills, and abilities of employees within the industry (Blake,
Sinclair, and Soria 2006).
It became clear during our interviews that the service
level that tourists perceive is an important determinant.
Some tourists simply would not even consider visiting a
country that they perceive as having a poor level of service
mindedness. The tourism industry is a perfect context for the
consideration of skills in services. Although technology has
replaced labor skills in the transformation of inputs in some
industries, it has not eliminated demand for higher order
skills within the tourism industry (Baum 2002). Recent stud-
ies have shown that tourists are more likely to return to those
destinations that provide a higher level of service (Alegre
and Cladera 2006).
Driver 8—Natural and cultural resources. It is also possible
to argue that the success of tourism destinations is affected
by natural and cultural/heritage resources to form their
attractions bases (Hassan 2000; Deng, King, and Bauer
2002). The experts highlighted that some destinations “virtu-
ally sell themselves.” Australia, for instance, relies heavily
on the general quality of its natural assets (Huybers and
Bennett 2003), which includes some World Heritage listed
natural attractions such as the Great Barrier Reef and Wet
Tropics Rainforests—as well as the general scenic land-
scapes and natural areas.
Recent literature on destination choice discusses that
many tourists consider natural attractions as essential drivers
behind the selection of a destination (Buhalis 2000). The
respondents also emphasized that the volume of creative
industries in a particular destination (e.g., art, crafts, design,
fashion, film, music, performing arts) is becoming a major
source of attraction for tourists. Figure 1 illustrates the pro-
posed framework.
Methods
Performance Estimation
We obtain performance measures in this study using the
Data Envelopment Analysis (DEA) methodology (Banker,
Charnes, and Cooper 1984). DEA uses linear programming
to convert multiple input and output measures into a single
measure of relative performance for each observation. It
basically identifies a benchmark frontier, which consists of
the best-performing firms (or countries in our case). If a firm
is not on the frontier, its radial distance from the frontier is
a measure of its inefficiency in performance. The firms with
maximum performance (100% efficient) are those for which
no other firms or linear combination of firms can generate at
least the same amount of each output (given inputs).

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392 Journal of Travel Research 51(4)

Table 2. Countries Included in the Study

Switzerland, Austria, Germany, Iceland, United States, Hong Kong SAR, Canada, Singapore, Luxembourg, United Kingdom, Denmark,
France, Australia, New Zealand, Spain, Finland, Sweden, United Arab Emirates, Netherlands, Cyprus, Belgium, Portugal, Norway, Greece,
Japan, Malta, Ireland, Estonia, Barbados, Taiwan, Malaysia, Israel, Italy, Tunisia, Czech Republic, Qatar, Slovak Republic, Croatia, Mauritius,
Hungary, Costa Rica, Korea, Rep, Thailand, Slovenia, Chile, Jordan, Bahrain, Jamaica, Mexico, Dominican Republic, Lithuania, Turkey, Latvia,
Bulgaria, Panama, Uruguay, Morocco, Egypt, Brazil, Indonesia, Serbia and Montenegro, South Africa, Poland, Argentina, India, Georgia,
Kuwait, Russian Federation, Guatemala, Botswana, China, Colombia, Namibia, Armenia, Azerbaijan, Romania, El Salvador, Ukraine, Sri
Lanka, Tanzania, Peru, Kazakhstan, Macedonia, Gambia, Trinidad and Tobago, Philippines,Vietnam, Honduras, Nicaragua, Albania, Algeria,
Zambia, Moldova, Cambodia, Ecuador, Kenya,Venezuela, Guyana, Uganda, Pakistan, Bosnia and Herzegovina, Mali, Nepal, Zimbabwe,
Bolivia, Tajikistan, Paraguay, Madagascar, Burkina Faso, Malawi, Nigeria, Benin, Ethiopia, Cameroon, Mozambique, Bangladesh, Lesotho,
Angola, Burundi, Chad.

A DEA performance measure (δˆi) can be simply derived To address this problem, we use here the bootstrap procedure
by solving the following linear programming: of Simar and Wilson (2007). We describe in Appendix A the
bootstrap algorithm.
δˆi = max δ > 0
δ̂i, λ
{
│ δ y ≤ ∑ y λ; x ≥ ˆ
i i
n

i=1 i i

∑ x λ; ∑ λ = 1; λ ≥0}, i =1….n Data

n n
i=1 i i=1
where yi is vector of outputs, xi is s vector of inputs, λ is
a I × 1 vector of constants. The value of δˆi obtained is the
performance score for the tourism industry of the ith country.
A measure of δˆi=1 indicates that a tourism industry is fully
efficient (i.e., has achieved maximum performance), and in-
efficient (i.e., less than maximum performance) if δˆi< 1. This
linear programming problem must be solved n times, once
for each country in the sample. Note that the DEA model can
also be estimated using either the constant returns to scale
(CRS)3 or variable returns to scale (VRS) assumptions and
the shape of the frontier will differ depending on the scale as-
sumptions that underline the model. In this paper we mainly
rely on the VRS assumption, since it has the advantage of
ensuring that an inefficient firm is only compared against
those firm of similar size.
Truncated Regression Model
The next step in the analysis is to estimate the impact of the
determinants on tourism performance. DEA performance
measures are truncated from below at one, and thus a trun-
cated regression model is more suited for the present con-
text, since OLS regression could predict scores greater
than 1, and as such produce biased and inconsistent param-
eter estimates. The model can be simply expressed as
δˆi = ziβ + ξi,
where δˆi the DEA performance score, zi is vector of
explanatory variables that are used to test our desired hypoth-
eses, β is a vector of parameters, and ξi is random error rep-
resenting statistical noise and independent of zi.
As the performance scores generated by DEA are strongly
dependent on each other in the statistical sense, using them in
a second-stage regression (as identified in Equation 2) might
violate the basic model assumption required by regression.
(1)
In order to address our research questions, we first needed
input and output data to measure tourism performance. As
stated above, the advantage of the DEA method is that it
allows the inclusion of multiple inputs and outputs. We dis-
tinguish between three types of inputs and four types of
outputs. On the inputs side, we use the number of employees
working in the tourism industry, the capital investments
made by governments on the tourism industry in a particular
year, and the total number of accommodation establishments
available in a particular country for a particular year. On the
outputs side,4 we use the total number of international tour-
ists, the total number of domestic tourists, the average length
of stay of international tourists, and the average length of
stay of domestic tourists. All these variables are well recog-
nized as important and critical inputs and outputs variables
for the tourism industry (Fuchs, Peters, and Weiermair 2002;
Bosetti et al. 2006; Cracolici, Nijkamp, and Rietveld 2006).
To construct the database on the above inputs and outputs,
we used several sources, including the World Tourism
Organization, Euromonitor database, tourism satellite accounts
of some countries, as well as Eurostat database. Our final sample
consisted of 120 countries located in Africa, the Americas, Asia,
Europe, and Oceania, for the period 2005-2008 (120 × 4 = 480
observations). We present in Table 2 the countries included
in the study. Note that the inclusion of more countries was
not possible because of data unavailability.
We used many sources to collect data on the different
(2) determinants that form the drivers of tourism performance
identified in Table 1. These include the World Bank, World
Economic Forum, United Nations Office on Drugs and
Crime, World Health Organization, Booz and Company,
Transparency International, International Energy Agency,
International Air Transport Association, Deloitte, Euromonitor,
Skytrax, Eurostat database, and Penn World Table. We pro-
vide more details in Appendix B about the model specifica-
tion and the units of measurement of each of the identified
determinants.

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Assaf and Josiassen 393

Table 3. Ranking of Countries Based on Their Tourism model fits the data well as most coefficients are significant
Performance Index except for four variables (airport density, hospital beds,
number of international fairs and exhibitions, and quality of
Lowest 20 Performing
Top 20 Performing Countries Countries airport service).7 Furthermore, all variables, except interna-
tional fair and exhibitions, were signed as we expected; an
Switzerland 0.9899 Senegal 0.1891 increase in international fair and exhibitions in the country
France 0.9891 Chad 0.1922 should help attracting more tourists. However, as the vari-
Spain 0.9888 Madagascar 0.1913 able is insignificant it is uncertain whether an increase in
Turkey 0.9735 Kenya 0.2031 international fair and exhibitions has a significant impact on
United Kingdom 0.9732 Gambia 0.2069 tourism performance. Thus, for all other variables, the sign
Finland 0.9715 Poland 0.2091 of the coefficients is in line with the theoretical expectations.
India 0.9704 Cyprus 0.2122 We do not intend here to give a detailed explanation about
Oman 0.9692 Latvia 0.2135 the proposed directions between tourism performance and
Australia 0.9632 Panama 0.2151 each of the variables as they were explained directly or indi-
USA 0.9574 Columbia 0.2187 rectly in the Methods section. For example, we expected
Malaysia 0.9503 Mauritius 0.2264 from the literature that an increase in HIV/AIDS and crime
Hungary 0.9523 Ukraine 0.2298
rate deters tourists from visiting a particular destination and
Israel 0.9420 Peru 0.2361
our results demonstrate that these two variables have a nega-
Germany 0.9387 South Africa 0.2388
tive impact on tourism performance (Kozak and Rimmington
Chile 0.9342 Venezuela 0.2431
1999; Harper 2001).
Austria 0.9337 Croatia 0.2452
South Korea 0.9322 Libya 0.2463
The first major aim of the present research was to ascer-
Jamaica 0.9178 Thailand 0.2578 tain the percentage contribution of each of the determinants
Portugal 0.9032 Taiwan 0.2601 toward tourism performance. The determinants in Table 2
Greece 0.9021 Bolivia 0.2634 are listed based on their elasticity score. The 10 most nega-
tively impacting determinants of tourism performance are
crime rate, fuel price level, hotel price index, CO2 emission
Results per capita, visa requirement, corruption index, unemploy-
ment rate, HIV/AIDS, ticket price, and time required to start
First, we present a ranking of the different countries based a business, while the 10 most positively impacting determi-
on the performance scores of their tourism industry (Table 3). nants of tourism performance are government expenditures
Because of space considerations, we only include the top on the tourism industry, stringency of environmental regu-
20 performing countries as well as the lowest 20 performing lation in the tourism industry, service-mindedness of the
countries.5 It is difficult to provide a country-by-country population toward foreign visitors, GDP per capita, quality
analysis of the results because of the large number of coun- of airline services, number of operating airlines, creative
tries analyzed in this study. However, we noticed that the top industries exports, number of five- and four-star hotels,
performers are those countries that have high scores on the level of staff training, and education index. In the next step,
determinants outlined in Table 1, particularly Switzerland, we examined each of the broad categories (drivers) to ascer-
Austria, Spain, France, Germany, the United States, the tain how many determinants within each driver rank in the
United Kingdom, and Australia. Generally, all these coun- top 10 enabling or top 10 inhibiting determinants. The
tries have well-established tourism industries and are also results show that the drivers that have all their determinants
consistently ranked among the top destinations in the world ranking among the top 10 positive and negative determi-
in terms of their tourism arrivals (Blanke and Chiesa 2009). nants are “Tourism Price Competitiveness,” “Economic
Table 4 presents the truncated regression results obtained Conditions,” and “Labor Skill and Training.” Other driv-
from 2,000 bootstrap iterations. The first column presents ers with strong presence are “Tourism and Related
the variables, the second column presents the coefficients, Infrastructure,” “Environmental Sustainability,,“Security,
and the third column presents the t statistics. Finally, in the Safety and Health,” and “Government Policies.”
last column we present the elasticity of each variable, which
expresses the percentage change in tourism performance for
1% change in each of the variables included. We use elastic- Discussion and Managerial
ity to rank the importance of each determinant in terms of Implications
their contribution to tourism performance.6 The formulation of firm strategy and tourism public policy
Note that we also checked the correlation matrix and cal- can directly benefit from identifying the factors that have the
culated the VIF coefficients and confirmed that collinearity most significant impact on the future performance of the
was not a problem. The results in Table 4 indicate that the tourism sector. Although several recent studies (Crouch and

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394 Journal of Travel Research 51(4)

Table 4. Bootstrapped Regression Results

Variable Coefficient Standard Error t Value Elasticity

Crime rate −0.0538 1.95E–02 −2.7590 −4.9653

Fuel price level −0.0234 5.64E–03 −4.1489 −3.4558
Hotel price index −0.0025 7.56E–04 −3.3069 −2.7798
CO2 emissions per capita −0.0002 2.63E–05 −7.6046 −2.3933
Visa requirements −0.0630 2.54E–03 −24.8031 −1.2010
Corruption index −0.1265 2.18E–02 −5.8028 −1.1403
Unemployment rate −0.0420 1.05E–02 −4.0000 −0.8470
HIV/AIDS −0.0040 1.82E–03 −2.1978 −0.5410
Ticket prices −0.0635 1.12E–02 −5.6696 −0.3568
Time required to start a business −0.0075 9.66E–04 −7.7640 −0.3461
Airport density −0.0035 2.36E–03 −1.4831 −0.2591
Number of international fairs and exhibition −0.0011 8.32E–05 −13.2212 −0.1198
Environmental performance 0.1648 3.87E–02 4.2584 0.1023
Quality of airport services 0.1117 8.41E–02 1.3282 0.1276
Hospital beds 0.0240 3.32E–02 0.7229 0.1544
Protected areas 0.0496 1.96E–02 2.5306 1.1354
Number of hotel rooms 0.9610 3.35E–01 2.8687 1.2138
Openness of bilateral air service agreements 0.0637 1.61E–02 3.9565 1.2160
Number of World Heritage cultural sites 0.1378 4.61E–02 2.9892 1.2565
Number of World Heritage natural attractions 0.3710 9.63E–02 3.8525 1.2978
Education index 0.9324 1.85E–01 5.0400 1.4930
Level of staff training 0.3250 1.23E–01 2.6423 2.2147
Number of five- and four-star hotels 0.3620 3.35E–02 10.8060 2.2422
Creative industries exports 0.6723 1.23E–01 5.4659 2.3558
Number of operating airlines 0.0369 8.62E–03 4.2807 2.6955
Quality of airline services 0.2311 3.83E–02 6.0339 3.3987
GDP per capita 0.0002 2.29E–05 8.7336 5.3178
Service-mindedness of population toward foreign visitors 0.4350 7.83E–02 5.5556 5.3819
Stringency of environmental regulation in the tourism industry 0.6365 1.26E–01 5.0516 5.6312
Government expenditures on the tourism industry 0.9320 8.11E–02 11.4920 7.1531

Ritchie 2005; Blanke and Chiesa 2009) have highlighted this
important issue, the present study provides the first compre-
hensive analysis of the determinants of tourism performance.
The strain on resources that usually accompany tough market
conditions makes it essential for managers involved in firm
strategy making (as well as for public policy makers) to iden-
tify the key leverage points where their strategies and inter-
ventions are most likely to maximize overall performance.
Several versions of the tourism competiveness report
published by the World Economic Forum emphasized the
need for a study that identifies and ranks the determinants of
tourism performance. While the TTCI is probably the best-
known instrument used to rank nations according to their
travel and tourism competitiveness, it is important to note
that it is not a performance index. Rather, it is an index of
broad categories of variables that may facilitate tourism
competitiveness. Thus, it is not possible from this index to
determine which inputs can be translated into industry per-
formance most efficiently, nor is it possible from the TTCI to
gauge how efficient a nation is in transforming its tourism
inputs into outputs.
Thus our findings indicate that the 10 most important
determinants were distributed among 6 drivers; those that
have all their determinants ranking in the top 10 most
important (either positive or negative) are “Tourism Price
Competitiveness,” “Economic Conditions,” and “Labor Skill
and Training.” The “Tourism and Related Infrastructure”
and “Environmental Sustainability,” “Security, Safety and
Health,” and “Government and Policies” drivers had also a
strong presence among the top 10.
It is possible to provide literature support for all these
findings. There is widely accepted evidence, for instance,
that price is one of the most important factors in decisions
about whether, and where, to undertake trips (Dwyer,
Forsyth, and Rao 2000; Dwyer and Kim 2003). The health of
the domestic economy is also a main determinant of activity
in the tourism industry. This is particularly relevant in rela-
tion to business travel spending. Consideration should also
be given to investments in tourism and related infrastructure
(e.g., hotels, airplanes, recreation sites) (Prideaux 2000).
Finally, the reason that all determinants in the “labor and
skill training” driver are important could be related to the

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Assaf and Josiassen 395

Gov. expenditures Visa Requirements

++ --
Economic Conditions GDP per Capita Government Policies Start-up Time
++ -
Unemployment rate Air Service agreements
- +

Number top hotels CO2 Emissions

+ --
Environmental
Number of airlines Env. Regulations
+ Sustainability ++
Infrastructure
Airline serv. qual. ++ Env. Performance
+
Hotel rooms + Tourism Performance Service mindedness
++
Labour Skills and
Crime rate Staff Training
-- Training +
Security, Safety, and
Corruption index General Education
Health - +
HIV/AIDS
- Creative Industries
+
Ticket Prices Natural and Cultural Natural Attractions
- +
Tourism Price Level Fuel Prices Resources Cultural Attractions
-- +
Hotel Prices Protected Areas
-- +

Figure 2. The tourism industry performance framework

Note: ++ indicate the five most important positive factors; -- indicate the five most important negative factors.

fact that many destinations still struggle to attract skilled
employees to the tourism industry. Thus, destinations that
score higher on this driver are expected to have a tourism
performance advantage. In Figure 2, we summarize the
results graphically. This framework could provide a useful
foundation for further studies in the area. The framework
should facilitate discussion and communication among the
stakeholders involved in the management of tourism destina-
tions. It can also be employed as a basis for auditing tourism
performance.
Concluding Remarks
In this paper we identified and ranked the determinants of
tourism performance using data on 120 countries located
across Africa, the Americas, Asia, Europe, and Oceania.
Our sample included four years of data ranging from 2005
through to 2008.
The study started with an identification of the determi-
nants underlying tourism performance, relying on both the
extant literature as well as on several expert interviews. In
total we identified 30 determinants of tourism performance,
which were then classified into eight broad drivers of tourism
performance on the basis of an interdisciplinary literature
review. We measured tourism performance with the DEA
bootstrap method using multiple tourism inputs and outputs.
Finally, we assessed the impact of the different determinants
on tourism performance using a bootstrapped truncated
regression model. As the determinants were measured on dif-
ferent scales, we relied on the elasticity measures to rank the
importance of each of the different determinants.
Our results indicated that the 10 most negative determi-
nants of tourism performance are crime rate, fuel price level,
hotel price index, CO2 emission per capita, visa requirement,
corruption index, unemployment rate, ticket price, HIV/
AIDS, and the time required to start a business, while the 10
most positive determinants are government expenditures on
the tourism industry, stringency of environmental regulation
in the tourism industry, service-mindedness of the popula-
tion toward foreign visitors, GDP per capita, quality of air-
line services, number of operating airlines, creative industries
exports, number of five- and four-star hotels, level of staff
training, and education index.
Finally, we also ranked the top 20 international countries
based on their tourism performance. We discussed the impor-
tance of this study in terms of its contribution to both the industry
and academic literature. We also highlighted the economic and
competitive challenges facing the industry and their effect on
resource allocation. Our central argument is that while some stud-
ies have measured tourism performance, none have focused on
the global scale, and none have also identified the determinants of
tourism performance. From here, this study should provide tour-
ism businesses and policy makers with a clear framework for
highlighting areas for resource allocation and future investments.
We also expect the results to be used by leading tourism associa-
tions such as the United Nation World Tourism Organization
and the World Travel and Tourism Council.
Undoubtedly, future studies might consider revalidating
the results of this study, and include and test if possible other
determinants of tourism performance. It might be useful to
include other possible inputs and outputs (e.g., management-
related variables) in the calculation of tourism performance.

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396 Journal of Travel Research 51(4)
This was not possible in this study because of data unavail-
ability. Finally, the results might also benefit from using a
more extended data set and including more countries into the
analysis.
Appendix A
Bootstrap Procedure
Calculate the DEA performance score δˆi for the tourism
industry of the ith country, using the linear programming
problem in Equation 1.
i Use the maximum likelihood method to estimate
the truncated regression of δˆi on zi, to provide and
estimate βˆ of β and an estimate σ̂ e of σe.
ii For each country i = 1,. . .,n, repeat the next four
steps (1-4) B times to yield a set of bootstrap
estimates{δˆ*i,b, b = 1,…, B}.
1. Draw εi from the N (0, σ̂ 2e) distribution with left
truncation at (1–βˆ zi)
2. Compute δ*i = βˆ zi + ξi
3. Construct a pseudo data set (x*i , y*i ) where x*i = xi
and y*i = yiδˆi / δˆi
4. Compute a new DEA estimate δ*i on the set of
pseudo data , (x*i , y*i ) that is,
iii. For each country, compute the bias-corrected esti-
ˆ
mate δˆi = δˆi – biâsi where biâsi is the bootstrap esti-
mator of bias obtained as: biâsi = 1_ Σ δˆ*i,b – δˆi.
B
B b=1
iv. Use the Maximum likelihood method to estimate
ˆ
the truncated regression of δˆi on zi, providing esti-
ˆˆ ˆ
mates ( β, σ̂ ) of (β,σe).
v. Repeat the next three steps (1-3) B2 times to obtain
{(
ˆˆ ˆ
a set of bootstrap estimates βb*, σ̂*b, b = 1, ..., B2
1. For i=1,. . .,n, ei is drawn from N (0, σ̂ˆ) with left
ˆ
truncation at (1–βˆzi)
ˆ
2. For i=1,. . .,n, compute δ*i*= βˆzi + ξi
3. The maximum likelihood method is again used
to estimate the truncated regression of δ*i* on zi,
ˆ
providing estimates ( βˆ*, σ̂ˆ*).
Appendix B
Model Specification
In line with Equation 2, the model used in the study can be
specific as follows:
36
δˆi = ∑ βjzij + ξi ,
j =1
where
δˆi is the performance score of the tourism industry of the
ith country , and zij is a vector of explanatory variables that
includes the following:
Downloaded from jtr.sagepub.com at University of Waikato Library on July 12, 2014
zi1= a variable that represents the number of hotel rooms
in each country; zi2= a variable that represents the number of
five- and four-star hotels in each country; zi3= a variable that
represents the number of operating airlines in each country;
zi3= a variable that represents the number airport density in
each country measured as the number of airport per million
population; zi4= variable that represents the quality of airline
services measured by the number of five- and four-star air-
lines; zi5= a variable that represents the quality of airport ser-
vices in each country measured by the number of five- and
four-star airports; zi6= a variable that represents the unem-
ployment rate in each country; zi9= a variable that represents
the GDP per capita of each country; zi8= a variable that rep-
resents the government expenditures on the tourism industry
in each country measured as a percentage of the total budget;
zi10= a variable that represents the crime rate measured as the
number of murders per capita of each country; zi11= a vari-
able that represents the number of hospitals beds in each
country; zi12= a variable that represents the corruption rate,
measured by taken the corruption index in each country;
zi13= variable that represents the HIV prevalence in each
country as a percentage of adults aged 15–49 years; zi14= a
variable that represents ticket tax and airport charges mea-
sured as an index of relative cost of access to international air
transport services; zi15= a variable that represents the retail
diesel fuel prices in each country; zi16= a variable that repre-
sents the hotel price index measured as the average room rate
of hotels in the country; zi17= a variable that represents visa
requirements in each country, measured by the number of
countries whose citizens are exempt from obtaining a visa or
able to obtain one on arrival out of all UN countries; zi18= a
variable that represents the Index of openness of bilateral Air
Service Agreements in each country; zi19= a variable that
represents the number of days required to start a business in
)}
each country; zi20= a variable that represents the metric tons
of CO2 emissions per capita in each country; zi21= a variable
that represents the environmental performance index of each
country; zi22= a variable that represents the stringency of
environmental regulation in each country, adapted from the
World Economic Forum, which measures this variable by
asking tourism experts in each country to rank from 1 to 7
the stringency of environmental regulation in their country;
zi23= a variable that represents the education index of each
country; zi24= a variable that represents the level of staff
training in the tourism industry for each country, adapted
from the World Economic Forum, which measures this vari-
able by asking tourism experts in each country to rank from
1 to 7 the degree of investment in staff training and develop-
ment in their country; zi25= a variable that represents the ser-
vice mindedness of employees toward tourists, for each
country adapted from the World Economic Forum which
measures this variable by asking tourism experts in each
country to rank from 1 to 7 the degree of hospitality toward
foreign guests in their country; zi26= a variable that represents
(continued)
Assaf and Josiassen
Appendix B (continued)
the number of world heritage natural attractions in each
country; zi27= a variable that represents the number of pro-
tected areas in each country; zi28= a variable that represents
the number of world heritage cultural sites in each country;
zi29= a variable that represents the number of international
fair and exhibitions in each country; zi30= a variable that rep-
resents the country’s share of total world exports of the fol-
lowing creative industries products: art crafts such as carpets,
celebration articles, architecture; fashion; glassware; jew-
elry; music; books, newspapers, and other written materials;
antiques, paintings, photography, and sculpture.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to
the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, author-
ship, and/or publication of this article.
Notes
1. By tourism performance, we mean how well the industry is
maximizing its outputs from its available resources (i.e., inputs).
2. Competitiveness refers to the ability to create added value and
competitive advantage from the available resources (Goodrich
1977; Pearce 1997; Ritchie and Crouch 2000). Countries might
have excellent tourism competitiveness but might not be per-
forming well because they are not using their resources opti-
mally (Blake, Sinclair, and Soria 2006).
3. A production function is said to exhibit constant returns to scale
(CRS) if a proportionate increase in inputs results in the same
proportionate increase in outputs. The variable returns to scale
(VRS), on the other hand, does not assume full proportionality
between the inputs and outputs.
4. We used here the Fried et al. (2002) procedure to adjust our
outputs for environmental differences between the countries
involved. Specifically, we used three environmental variables
to adjust our outputs. These were formed by dividing the coun-
tries into three groups: Countries in Group 1 include those that
have an index close to 5 and higher (of 7). The second group
includes those countries that have achieved middle ranking on
their tourism competitive index over the period of study, while
the third group includes those countries that have achieved the
lowest ranking on their tourism competitive index. Note: As the
Fried et al. (2002) procedure is well established in the literature,
we do not intend to reiterate it here.
5. The results for other countries can be obtained from the authors
on request.
6. This is because elasticity is invariant to units of measurement,
which is essential for the aim of this study seeing that it is not
possible to rank variables using the size of coefficient, as the
variables are measured on different scales.
Downloaded from jtr.sagepub.com at University of Waikato Library on July 12, 2014
397
7. We decided to leave these four variables in the estimation, as
their exclusion from the model had only a minor impact on the
significance of other variables.
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399
Bios
A. George Assaf (PhD) is an Assistant Professor at the Isenberg
School of Management, University of Massachusetts-Amherst. His
research interests are tourism/transport economics, marketing
research and banking and finance. He has published on these topics
in leading journals such as Journal of Banking and Finance, Journal
of Travel Research, Tourism Management, and Journal of Retailing.
Alexander Josiassen (PhD) is an assistant professor at Copenhagen
Business School. Alexander’s research interests are marketing
research, and consumer/ tourist behavior locally and internationally.
Alexander has published on these topics in leading international
journals such as Journal of Marketing, and Tourism Management.