The management of tourism destinations: a policy game

Real-world tourism destinations differ in the way they develop and are managed. This is mainly due to the complexity of the tourism product (a bundle including both complementary and substitute goods and services) and the type of primary resource. Moreover, the planning of tourism and the policy of the destination depend on coordination and cooperation among several agents (private companies, public bodies and hybrid agents) on a plethora of issues. This article deals theoretically with the alternative patterns of strategic interaction that can be played by the different stakeholders of the destination: private agents can either play cooperative or non-cooperative pricing strategies, while the optimal investment policy for the destination management depends on the timing of the game (private and public agents’ moves can either be simultaneous or sequential). By jointly considering the two features of cooperation and game timing, the authors are able to identify four different cases for their policy model. They show that the solutions of these cases generally differ and, if private agents are coordinated, the policymaker’s choice between simultaneous and sequential moves is irrelevant. On the contrary, if agents are not coordinated, the policymaker prefers to use its first-move advantage in the sequential game in order to reduce the inefficiency stemming from the non-coordination of prices. The results are carefully discussed with respect to the peculiarity of the tourism product (where mainly complementary goods are included) and to the different patterns of destination management which are observed worldwide.