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This Is the Author-Manuscript Version of This Work - Accessed From This is the author-manuscript version of this work - accessed from http://eprints.qut.edu.au Current item: Pike, Steven D. (2007) A cautionary tale of a resort destination's self-inflicted crisis. Journal of Travel & Tourism Marketing 23(2/3/4):pp. 73-82. Copyright 2007 Haworth Press A cautionary tale of a resort destination’s self-inflicted crisis Pike, S. (2007). Journal of Travel & Tourism Marketing. 23(2/3/4): 73-82. Dr Steven Pike School of Advertising, Marketing & Public Relations Queensland University of Technology Gardens Point Campus, 2 George Street, Brisbane Queensland 4001 Australia E-mail: [email protected] Abstract Rotorua was New Zealand’s first tourism destination, rising to prominence a hundred years ago on the back of the central government’s vision for a South Pacific spa to rival those of Europe. Government resources were used to develop and support Rotorua’s infrastructure and tourism industry, like no other in the British Commonwealth, for the best part of the 20th century. By the 1980s however, Rotorua’s tourism industry was in a crisis; and it is posited that the crisis was largely self- inflicted. The paper provides an historical summary of key events leading to the crisis, and subsequent efforts to regain destination competitiveness through a public-private partnership. Written from the perspective of the CEO of the destination’s inaugural regional tourism organisation charged with co-ordinating the marketing response to the crisis, the case provides a cautionary tale of how one destination’s success as a destination has risen, fallen and risen in line with government intervention. 1 Key words Government intervention, tourism crisis, regional tourism organisation, history, destination competitiveness, public-private partnership Introduction The primary role of any destination marketing organisation (DMO) is to foster market competitiveness. Since achieving competitiveness is now a major challenge for most destinations (WTTC, 2002), this is as much an issue of significance to individual businesses as it is to DMOs. After all, the success of individual businesses is to a large extent reliant on the competitiveness of that destination (Pike, 2004), particularly in places affected by disasters and crises. Many DMOs at national and local levels started life as government departments. Although there has been a shift in structure towards limited liability companies, trusts and public-private partnerships, most DMO funding remains from government. Many outside the tourism industry have questioned why taxes should be used in destination marketing to ‘subsidise tourism businesses’. A political implication of this has been witnessed in the USA, where lack of Congress support for a national tourism office is a result of a strong political lobby arguing this would represent ‘corporate welfare’ (Gatty & Blalock, 1997). Without government intervention, particularly in the form of financial resources, most DMOs would not exist in their current form. Government withdrawal of funding in Colorado, Maine and California in recent years (see Doering 1979, Donnelly & Vaske 1997) provides indications of how destination marketing activities can be curtailed through a drop in budget that cannot be reimbursed through 2 corporate sponsorship or membership levies. For example, Colorado slipped from 3rd to 17th in terms of traveller recognition of state destinations, and visits by pleasure travellers decreased by up to 10% in the short term. In 2003 the governor of California proposed the state tourism office be closed as a cost saving measure when the state faced a $35 billion shortfall (Inbound, 13 January 2003, p. 1). Such a withdrawal of government funding can lead to a tourism crisis. In 2006 for example, Tourism Waikato, one of New Zealand’s regional tourism organisations (RTO), had its budget unexpectedly cut in half by the local government (see Coventry, 2006, p.1). Tourism Waikato’s Chief Executive Officer lamented: “It’s a very gut wrenching situation. Marketing of the whole Waikato will be suspended until funding regenerates”. Increasing attention in the tourism literature is being devoted to destination disaster management. This has been particularly evident in the new millennium; a time when the competitiveness of many destinations has been tested by a diverse range of exogenous events involving terrorism, acts of God, and threats of pandemics. In the case of such ‘wildcard events’, described by Hall (2005) as being low probability but high impact, the destination’s recovery will depend on the level of preparedness. Hall rightly argued there exists a tendency in tourism to assume the unthinkable will not happen. This may imply a view that the future will continue to evolve as per the past, and in this paper it is argued management’s unpreparedness for a different future can lead to a crisis. A crisis is a self-inflicted situation caused by inept management practises or an inability to adapt to a changing environment (Faulkner, 1999). A disaster on the other 3 hand is a sudden catastrophic event over which the DMO has little or no control. In the emerging literature on destination disaster management, there have been a number of very useful cases about DMO responses to a wide range of disasters such as cyclones (Faulkner & Vikulov, 2001), Foot and Mouth disease (Frisby, 2002), bush fires (Christine, 1995), travel advisories (Beirman 2003), war (Mansfield, 1999), violence (Leslie, 1999) and terrorism (Hopper, 2002). While destinations in decline have also been mentioned in the literature, including Hamm (Buckley & Witt, 1985), Majorca (Morgan, 1991), Canada (Go, 1987), Bermuda (Conlin, 1995), and Amsterdam (Dahles, 1998), little has been reported about attempts by a destination to recover from such a management crisis. This paper documents a tourism crisis that emerged through the inability by a resort destination’s stakeholders to adapt to a changing environment. A historical perspective elucidating the context of the crisis, involving a significant review of archival material, is followed by a reflexive narrative of recovery efforts from the perspective of the inaugural RTO manager appointed to coordinate marketing aspects of the recovery. In this regard the paper joins other practitioner reflections on practical DMO challenges (see for example Curtis 2001, Frisby 2002). The destination of interest is Rotorua, which was New Zealand’s first tourism resort area. Singled out by the country’s government in the late 1800s as a future ‘Sanatorium of the earth’, the area became a beneficiary of levels of support only dreamed of by other New Zealand regions. The New Zealand government built infrastructure, accommodation, spas, tourist attractions and transport, handled the majority of all domestic and overseas promotion, and even operated the local visitor information centre for 90 years. However, Rotorua’s star status within the New 4 Zealand tourism industry, which the destination had enjoyed for the best part of a century, declined to such a point that by the late 1980s the local tourism industry was considered to be in a state of crisis. Rotorua – Sanatorium of the Earth! Rotorua has a short-recorded history by international standards. The township was officially created in 1880, through the British Crown’s ‘Fenton Agreement’ with the Maori owners. The first non-indigenous visitors were traders (see Cowan, 1935) and missionaries (see Tapsell, 1972) during the 1830s. The first tourist was thought to be naturalist John Bidwell, in 1839, who later published the book Rambles in New Zealand (Stafford, 1977). The reason for the early visitation was to experience the Pink and White Terraces. These were impressive silica terraces, probably similar to Turkey’s white terraces at Pamukkale, formed from mineral deposits in the geothermally heated water. An attraction for visitors was the opportunity to bath in the natural recesses of the terraces. There were few other tourist attractions in New Zealand at this time (Reggett, 1972). The systematic colonisation of New Zealand began in the 1840s (Cushman, 1990), and the first settlement of Europeans at Rotorua occurred in 1856 (Tapsell, 1972). By this time, the potential of Rotorua’s geothermal waters was attracting attention. In 1859 the Auckland Provincial Government commissioned Austrian Geologist Dr Ferdinand Von Hochstetter to document the ‘Natural Characteristics of the Thermal Area’ in southern Auckland (Reggett 1972, Tapsell 1972). While Von Hochstetter’s ensuing report is credited with generating much interest in the region, it was the 1870 visit of the Duke of Edinburgh and accompanying media that stimulated the first real 5 growth of tourist traffic (Steele, 1980). The Duke’s visit, along with other luminaries such as Mark Twain, is said to have established Rotorua in the wealthy social circles of America and Europe (Reggett, 1972), and a part of the ‘grand tour’ of the colonies (Savage, 1986). Disaster struck in 1886 when Mount Tarawera erupted, destroying three Maori villages and obliterating the terraces. While this was a devastating blow for tourism, within two years Rotorua’s annual visitor arrivals were higher than pre-eruption levels (Reggett, 1972). Part of the continued interest in Rotorua was the eruption aftermath and new volcanic craters, which remain attractions today and evidence of Ahmed’s (1991) suggestion of a dark side to tourism. Interest was also directed towards the therapeutic values of the remaining geothermal features (Stafford, 1986). Brown’s
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