Reviewing Two Decades of Value Creation in Tourism: An Attempt to Develop a Conceptual Framework

Abstract

Tourism is one of the world economy pillars. In the last decades, it underwent an evolution related to consumer behaviour and technological progress. Facing this evolution, several efforts were made by companies; for example, some of them looked for new ways to create value. Despite a great number of studies conducted, the literature shows less evidence related to the variables that affect value creation in tourism companies. Hence, the objective of this paper is to propose a conceptual framework of value creation measurement in tourism through mapping the most frequent indicators in literature. To do so, the authors asked the following research question: what indicators of value creation in tourism were the most mobilized during the last twenty years? Then they performed a meta-analysis based on value creation papers published during the period ranging from 1997 to 2017. Furthermore, based on the NVivo 11 coding method, they processed 747 indicators, of which they considered that 66 were more frequently used as they had been cited at least twice. The main ones are service quality, customer satisfaction, environmental management, and profitability. They grouped these frequent indicators in five categories, namely: customers (10), employees and skills improvement (9), environment and natural resources (6), finance (20), and internal processes (21).

Keywords:

• value creation,
• value co-creation,
• performance,
• tourism sector,
• value creation indicators

Tourism is considered one of the most important and dynamic sectors of the global economy: it yields important results, plays a key role in global economic development, job creation, export earnings, and added value (OECD, 2018). It also has remarkable impacts, for example in reducing the price of airline tickets and facilitating trip organization and planning.

Numerous economic, social, and technological transformations have enabled tourism companies to take advantage of the opportunities offered by this new situation. However, it has made value creation complex as managers must deal with previously non-existent challenges and restrictions in order to control costs, retain actual clients, and attract more potential customers. Bernard Marr, Giovanni Schiuma, and Andy Neely (2004) state that firms create value by exploiting their internal resources and capabilities and applying strategies that respond to market opportunities. However, making efforts to improve value creation is not enough in the absence of a good measurement system that can provide information on whether a company is creating or destroying value. According to Robert S. Kaplan and Michael E. Porter (2011), the biggest problem regarding value creation is measuring the wrong things the wrong way.

Most studies on value creation measures in tourism focus on a single perspective, either the customers’ measures (ex.: customer satisfaction) or the firm’s measures (ex.: profitability), without using an integrative approach that includes items related to both customers and business performance (Brandt et al., 2017; Garrido-Moreno et al., 2018). The concentration of tourism scholarship on some aspects of value creation at the expense of others may lead to an ambiguous and one-sided view of value creation (O’Cass and Sok, 2015). To fill the gap, we propose a conceptual framework to measure tourism value creation by addressing the following question: what have been the most mobilized indicators of value creation in tourism during the last two decades?

This paper is structured as follows. After providing the theoretical background of the study, we describe the methodology of our review. We then present the outputs in terms of approaches, the most frequent value creation indicators, and a proposition of a conceptual framework of value creation measurement. We conclude with a discussion of the main findings, directions for future research, and limitations of the research.

Value Creation in Tourism

The value concept was studied in different research fields and based on several approaches (that is, shareholder value approach; service-dominant logic; economic added value approach; data envelopment analysis [DEA] approach). Stephen L. Vargo, Paul P. Maglio, and Melissa Archpru Akaka (2008) explain that the definition of value is ancient; it was first studied by Aristotle who made a distinction between “use value” and “exchange value.” The use value of a product is a sum of its components and their related qualities, whereas the exchange value is the quantified value of a product or a service represented in terms of the commensurable value of another. According to Christine Botosan and Adrienna Huffman (2015: 5), Adam Smith’s theory about value also distinguishes “value in use” and “value in exchange; Smith argues that “the things which have the greatest value in use have frequently little or no value in exchange; and on the contrary, those which have the greatest value in exchange have frequently little or no value in use.”

According to Valarie A. Zeithaml (1988), people define value in four different ways. The first definition, “value is low price,” means that the valued products or services, for some people, are those with low prices. The second definition is “value is whatever I want in a product”; this definition emphasizes the benefits derived from purchasing a product or service. The third definition, “value is the quality I get for the price I pay,” reflects the relationship between quality and price. And the last one, “value is what I get for what I give,” is a trade-off between the benefits and the sacrifices supported by a customer to acquire a product or a service.

Halil Shevket Neap and Tahir Celik (1999) define value as the intention of the owner or the buyer to keep or purchase a product. It is then indispensable to take into account the subjective aspect of the term while defining it. It provides a distinction between value engineering and value management. Value engineering relates value to costs and functions; its purpose is to perform the main functions of a product for the minimum cost. Value management rather aims to maximize the functional value of a product.

Cliff Bowman and Véronique Ambrosini (2000) have also addressed the difference between the value in use and the value in exchange. According to these authors, customers describe the former based on the usefulness of the provided product, whilst the latter is determined when the product is sold. It is the amount of money that the buyer gives in exchange for the perceived value-in-use.

For a better understanding of value, some scholars enlightened the dimensions of the perceived value (Babin et al. , 1994; Sánchez et al. , 2006; Roeffen and Scholl-Grissemann, 2016). The most often cited dimensions in the literature are: functional, hedonic, and social. Jagdish N. Sheth and Can Uslay (2007) define functional value as the perceived utility derived from an alternative capacity for functional, utilitarian, or physical performance. The hedonic value takes into account the customer’s feelings. According to Digna Roeffen and Ursula Scholl-Grisseman (2016), the hedonic value even considers the customer’s feelings more than his thoughts. The hedonic value is the subjective aspect of value, it is the outcome of fun and playfulness rather than task completion (Holbrook and Hirschman, 1982). Finally, the social value results from attitude, which is shared by society and determined by the social impact of a service purchased (Sánchez et al. , 2006).

In the tourism sector, Ursula S. Grissemann and Nicola E. Stokburger-Sauer (2012) summarize value creation in three points: (1) in order to remain competitive, service providers in tourism have to create unique and memorable experiences for customers; (2) the Internet has considerably transformed customer knowledge allocation about hotels, flights, and destinations; and (3) customers create value not only for themselves and the company, but also for others. Moreover, the competition of hotels has been changed from a destination level to an international level (Roeffen and Scholl-Grissemann, 2016). Thus, the customers’ participation in the value co-creation process is fundamental as they will involve time and effort to produce experiences (Prebensen et al. , 2013).

Furthermore, to know whether tourism organizations create or destroy value requires the implementation of a measurement system that is appropriate to the specificities of the sector, and that allows an evaluation of the effectiveness and efficiency of the actions carried out by using relevant indicators.

The balanced scorecard (BSC) is an approach that has been adopted in the literature to develop measurement frameworks. Helen Atkinson and Jackie Brander Brown (2001) have mobilized this approach using the answers to 18 questionnaires completed by hotel companies in the UK to generate 5 categories of indicators: competitiveness, financial performance, quality of service, flexibility, and innovation. Paul Phillips and Panos Louvieris (2005) have also embraced the BSC approach to determine the key drivers of performance measurement in tourism, hospitality, and leisure small and medium-sized enterprises [SMEs]. They collected data from 11 businesses in the UK using a framework of 32 indicators broken down into 4 categories: financial, customer-related, internal business, and innovation/learning.

From a sustainability perspective, HwanSuk Chris Choi and Ercan Sirakaya (2006) have developed a list of indicators to measure community tourism development (CTD). Mobilizing a Delphi method and a panel of 38 academic researchers, they obtained a set of 125 indicators that were classified according to 6 dimensions: political, social, ecological, economic, technological, and cultural. The analysis of indicators was a three-round process in which panel members were asked to identify the items, rate their opinion in terms of agreement or disagreement, and assess the soundness of the listed indicators. According to that study, the indicators can be used to control the influence of tourism on rural communities.

Methodology

This paper represents a meta-analysis of value creation indicators in tourism. We addressed the following question: what were the most mobilized indicators of value creation in tourism during the last two decades? We adopted the methodology developed by Harris M. Cooper (1998), who described a research review as a five-stage process: problem formulation, literature review, data evaluation, data analysis, and presentation (figure 1).

Figure 1

The Methodological Approach

Source: Adapted from Cooper (1998) .

Sample Selection

The selection of the articles is based on two parameters: the first one relates to specific keywords: value creation, value co-creation, and performance measurement in tourism. The second parameter is the time scale, which covers the period from 1997 to 2017 inclusively. Only journals in English were included in the sample.

Figure 2 shows the number of articles from 1997 to 2017 classified by three-year periods: 2012-2014 includes 38% of the sample. In fact, as this study is about indicators that measure value creation, we kept in our sample only the articles that dealt with value creation indicators, measurement approaches, and performance measurement frameworks. This explains the inequality in the distribution of the articles over the years.

Figure 2

Timescale

Source: The authors.

In addition, the distribution of the articles can be explained by the evolution of the topics studied (see tables 1-4). Topics such as service quality, performance measurement, and competitiveness appear to be examined during the whole period under review, while concerns have only emerged in recent years regarding other topics such as tourism clusters (ex.: Peiró-Signes et al., 2014), value co-creation (Prebensen et al., 2013; Morosan and DeFranco, 2016), and service-dominant logic (Ordanini and Parasuraman, 2011).

Table 1

Number of Articles by Theme

Source: The authors.

Table 2

Number of Articles by Theme

Source: The authors.

Table 3

Number of Articles by Theme

Source: The authors.

Table 4

Number of Articles by Theme

Source: The authors.

The collection of articles was conducted following three channels: citation tracking, key journals, and key databases (Jstor, ScienceDirect, Springer, Emerald Insight, Taylor Francis Online, Inderscience Online, Informs PubsOnline, Sage Journals, Wiley Online Library).

Table 5 presents the number of articles in the top 20 journals. At the topmost we find Tourism Management , with 26 articles, thus representing 22% of the total articles, followed by the International Journal of Hospitality Management with 19 articles, that is, 16% of all articles. This table serves as a reference for researchers and practitioners in the field of value creation. Table 6 summarizes the sources from which the articles of the sample were extracted; 74 articles have been collected from ScienceDirect.

Table 5

Number of Articles in the Top Twenty Journals

Source: The authors.

Table 6

Databases Searched

Source: The authors.

Data processing

After gathering 117 articles that met the sample selection criteria, data processing was performed mobilizing NVivo 11. We started by analyzing the outputs in terms of approaches, journals, and databases. We then analyzed the key findings and the indicators in use. At that stage, we collected 747 indicators mobilized in value creation literature in the tourism sector. These indicators were processed using the coding method in order to determine the most frequent ones (66 indicators). Then, we classified them into 5 dimensions (table 7): customers (10), employees and skills improvement (9), environment and natural resources (6), finance (20), and internal processes (21).

Table 7

Number of Indicators Developed by Dimension

Source: The authors.

Results

Approaches

Value creation is a topic that has been studied according to different approaches. Table 8 provides a list of the top 10 approaches used in value creation literature, which represent 92% of the articles in our sample.

Table 8

The Top Ten Approaches Used

Source: The authors.

Theoretical Construct with Empirical Evidence

Some authors establish their own conceptual model that responds to specific characteristics determined in their own context, and then they propose empirical evidence on the validation of their theoretical framework. This approach has been used in 72 articles, that is, 62% of our sample.

Data Envelopment Analysis (DEA)

Data Envelopment Analysis (DEA), first proposed by Abraham Charnes, William W. Cooper, Arie Y. Lewin, and Lawrence M. Seiford (1994), has become a well-known and widely used approach in management sciences (Liu and Tone, 2008). DEA is applied to elaborate a best practice group among observed units and compare with the best practice group in order to detect the inefficient units (Yang, 2006). It was developed to study the efficiency of various units, called decision-making units (or DMUs) (Perrigot, et al., 2009). To overcome the DEA limitations, some authors have combined the DEA with other approaches, such as the principal components analysis (PCA) (Bruce Ho and Dash Wu, 2009).

Service-dominant Logic (SD-Logic)

This approach supposes that consumers are not passive receivers of value, but they contribute to the value creation process, which means that consumers are co-creators of value (Vargo and Lusch, 2004). Hence, the articles that mobilize this approach build their studies on the premise of the collaboration between customers and suppliers to create value.

Balanced Scorecard Approach (BSC)

A balanced scorecard is an important approach to the strategic management of companies. It is a combination of financial and non-financial indicators to measure a company’s performance. It monitors short-term financial performance while also highlighting the value of long-term financial metrics and competitiveness (Kaplan and Norton, 2001).

Stochastic Frontier Approach

A stochastic frontier is an approach that focuses on measuring efficiency. According to Ming-Hsiang Chen (2007), efficient units are functioning either on the cost frontier or the production frontier, while inefficient ones operate either below or above the frontier.

Total Quality Management (TQM)

According to David Hoyle (2007), TQM refers to “a management philosophy and company practices that aim to harness the human and material resources of an organization in the most effective way to achieve the objectives of the organization.” Many studies have shown that the sustainability of a company may not be improved by quality management due to the lack of participation of top managers and also the application of isolated techniques without adopting the TQM strategy (Benavides-Velasco et al. , 2014).

Sustainable Value Approach

Other studies have enlightened the sustainable aspect of value (Choi and Sirakaya, 2006; Castellani and Sala, 2010; Iniesta-Bonillo et al., 2016). For Erling Holden, Kristin Linnerud, and David Banister (2014), sustainable development is a political concept, like democracy.

Human Resources Management (HRM)

This approach puts customers at the centre of the research to study the impact of human resources on other variables such as service quality and customer satisfaction. Mohinder Chand (2010) believe that this approach is important, as it considers the staff problems that the company is experiencing.

Economic Value Added Approach

The economic value added approach (EVA) is a financial performance measure that shows the true profit of a company. The cost of capital is considered as a key element of EVA in estimating the performance measurement. In other words, EVA is the outstanding wealth resulting from deducting the cost of capital from the operating profit. Therefore, the company’s value increases only when the revenues it generates exceed its expenses (Iazzolino et al. , 2014).

Value Chain Management

Michael E. Porter (1985) defines the value chain as a series of actions that aim to produce value for the customer. According to Yıldırım Yılmaz and Umit S. Bititci (2006), there exists an opportunity to study the tourism sector as a value chain and to conceptualize a value chain-oriented performance management that will facilitate the coordination of different stakeholders.

Indicator Categorization

Value creation is a research field that involves both financial indicators such as the impact of the value created on profitability, revenues, or wealth, and non-financial indicators, which are very often related to attitudes like trust and comfort (Grönroos, 2008). As can be observed in the word cloud generated (where the size of each word indicates its frequency or importance) (figure 3), financial indicators frequently mentioned are profit, revenues, sales, and costs, while most non-financial indicators are related to customers and employees.

Figure 3

Word Cloud of the Indicators Used

Source: The authors.

Based on the indicator coding made using NVivo 11, it was possible to survey a list of 747 indicators, from which 84 are considered frequent as they were mobilized at least twice in our sample. The other 663 indicators were removed from the list because of their low frequency and they are therefore considered irrelevant to this study.

The frequent indicators are of two types: common indicators that can be generalized to the whole tourism sector, and specific indicators that are related to one specific industry, such as revenue per available room (RevPAR), which is a metric used in hotel industry to measure the ability to fill the available rooms at an average rate. The specific ones (17 indicators) are excluded from our list to allow the use of the framework in different industries of the tourism sector.

The summary of the remaining 66 indicators is presented in table 9 with the number of times they have been mobilized in the literature under the frequency label. The average frequency (sum of frequencies divided by the number of indicators) is approximately 5. At the top of the list are service quality with a frequency of 19, customer satisfaction with a frequency of 8, environmental management with 17, profitability with 17, employee training with 13, innovation also with 13, market share with 12, return on assets (ROA) with 11, and information technologies with a frequency of 10.

Table 9

The Most Frequent Indicators

Source: The authors.

The selected indicators were classified into 5 dimensions (see table 10): customers, employees and skills improvement, environment and natural resources, finance, and internal processes.

Table 10

Conceptual Framework of Value Creation Measurement

Source: The authors.

The analysis yielded 10 indicators for the customers dimension: service quality (FREQ [frequency]=19), customer satisfaction (FREQ=18), market share (FREQ=12), customer loyalty (FREQ=6), customer attraction (FREQ=5). The other indicators are below the average (of 5): customer retention (FREQ=4), customer orientation (FREQ=3), feedback (FREQ=3), price emphasis (FREQ=3), and meeting customer needs (FREQ=2).

The employees and skills improvement dimension gathers 9 indicators: employee training (FREQ=13), employee satisfaction (FREQ=9), employee education (FREQ=4), employee development (FREQ=2), employee experience (FREQ=2), employee retention (FREQ=2), employee turnover (FREQ=2), friendliness (FREQ=2), and self-presentation (FREQ=2).

In the environment and natural resources dimension, 6 indicators were identified: environmental management (FREQ=17), natural resources (FREQ=8), water-saving (FREQ=4), environmental performance (FREQ=3), environmental sustainability (FREQ=3), and CO₂ emissions (FREQ=2).

The financial dimension assembles 20 indicators. At the top of the list are profitability (FREQ=17), return on assets (ROA) (FREQ=11), return on investment (ROI) (FREQ=8), cash flow (FREQ=6), return on sales (ROS) (FREQ=6), gross operating profit (GOP) (FREQ=5), total sales (FREQ=5), gross domestic product (FREQ=4), and liquidity (FREQ=4).

Last but not least, the internal processes dimension includes 21 indicators. At the top of this category are innovation (FREQ=13), information technologies (FREQ=10), facilities (FREQ=8), risk management (FREQ=8), competitive advantage (FREQ=3), efficiency (FREQ=3), number of new products and services (FREQ=3), productivity (FREQ=3).

Discussion

Debate on value measurement has always been of immense importance in marketing research. Multiple metrics have been developed to enable shareholders and executives to assess whether their companies are creating or destroying value (Venanzi, 2010), such as economic value added (EVA) and cash flow return on investment (CFROI). However, these measures are inappropriate for the tourism sector as they focus on quantitative and accounting data, whereas other qualitative information, such as customer satisfaction and service quality, can be seen as important references for decision-making. Therefore, addressing this concern by developing a set of indicators that are commonly used in the literature on value creation in tourism is crucial.

Indicators are defined as “information sets which are formally selected to be used on a regular basis to measure changes that are of importance for tourism development and management” (World Tourism Organization, 2004: 8). According to Choi and Sirakaya (2006), indicators must be quantified, simplified, and transformed into communicable information or data. For example, service quality can be measured through the 5 dimensions of the SERVQUAL model, which are: tangibles, reliability, responsiveness, assurance, and empathy (Laws, 2000).

This review has identified 66 indicators of value creation, which were classified into 5 categories: customers (10), employees and skills improvement (9), environment and natural resources (6), finance (20), and internal processes (21). The selection of the indicators was made on the basis of the frequency parameter (which had to be at least two for each indicator).

At the top of the list of indicators in the customers dimension are service quality and customer satisfaction. This is in line with the findings of Helen Atkinson and Jackie Brander Brown (2001), who developed a measurement framework using a questionnaire survey and a series of interviews conducted with hoteliers, industry consultants, and academic researchers. They found that the quality of service was rated most highly by 94% of the respondent group. In addition, customer satisfaction was also highly rated by 89%. Christina G. Chi and Dogan Gursoy (2009) also confirm that customer satisfaction is one of the most frequently studied topics in tourism literature. Thus, given the non-financial criteria, customer-related indicators obtain the highest score.

In the employees and skills improvement dimension, the indicators employee training and employee satisfaction are found to be most frequent. According to Albert George Assaf and Alexander Josiassen (2012), superior labour skills are considered in many industries, including tourism, as an important source of competitive advantage. Employee training is one of the human resources practices that can improve quality and allow employees to deliver superior service quality (Chand, 2010). Thus, employee satisfaction is regarded as one of the most important indicators, as perceived by businesses (Phillips and Louvieris, 2005).

Regarding the environment dimension and natural resources, indicators such as environmental management and natural resources received the highest frequency. Enrique Claver-Cortés, Jorge Pereira-Moliner, and José F. Molina-Azorín (2009) defined the environmental management as the top management’s degree of commitment to a number of items, for example, purchase of ecological products, reduced use of environmentally dangerous products, use of ecological arguments in marketing campaigns, and energy-saving and water-saving practices. The environmental commitment provides additional points for value generation in the tourism ecosystem (Brandt et al., 2017). As water-saving practices is an indicator that is implicitly incorporated in environmental management, it can be eliminated from the list. Also, environmental sustainability can be considered as a dimension that gathers all the previous environmental indicators (Assaf and Josiassen, 2012).

The internal processes dimension includes most of the indicators (21), and innovation and information technologies are the most frequent. Andrea Ordanini and A. Parasuraman (2011) have proposed a model to investigate the antecedents and consequences of innovation, employing two performance measures: revenue growth and profit growth. They found that innovation volume can be fostered by collaborating with customers and employees which have a significant influence on both performance measures. Some scholars (Phillips and Louvieris, 2005; Lin, 2013; Lee et al. , 2016) have considered innovation as a dimension that can be measured through indicators such as the number of new products/services, process improvement initiatives, productivity, new technology, and new delivery system.

Furthermore, our findings indicate that information technology (IT) with regards to value creation has been largely discussed since 2005, either as a study focus or as a mobilized item. Sunny Ham, Woo Gon Kim, and Seungwhan Jeong (2005) have examined the effect of IT applications on the performance of upscale hotels; they found that either front-office IT applications, back-office IT applications, or management systems affect significantly the performance of hotels. Thus, considering the complexity of adopting ITs in tourism, especially for small businesses that have limited financial resources and/or government support (Cázares-Garrido, 2016), measuring the value created through the information technology indicator is indispensable.

Profitability is the financial indicator that received the highest frequency, a finding also supported by Helen Atkinson and Jackie Brander Brown (2001). Profitability is a traditional metric that serves as an output of some decisions made by managers. For instance, a lack of employee training and low investments in fixed assets and technology may be responsible for low profitability (Sharma and Upneja, 2005), while higher profitability can be achieved through an improved service quality, a higher degree of agglomeration, an adapted online channels strategy, and an entrepreneurial self-efficacy (Atkinson and Brander Brown, 2001; Lin, 2013; Kim et al. , 2014; Marco-Lajara et al. , 2014; Lee et al. , 2016). Other frequent financial indicators have been identified, for example, return on equity, return on assets, and return on sales, which can be considered as profitability metrics (Garrigós ‐ Simón et al. , 2005).

Conclusion

This article aimed to determine a set of indicators that can be used to develop a framework of value creation measurement. In order to achieve this goal, we have addressed the following question: what were the most mobilized indicators of value creation in tourism during the last twenty years? To answer this question, we reviewed 117 articles on value creation published from 1997 to 2017. We identified 66 indicators that have been most cited in tourism literature. We classified these indicators into 5 categories: customers (10), employees and skills improvement (9), environment and natural resources (6), finance (20), and internal processes (21). Our findings indicate that non-financial indicators are the most frequent. Moreover, the top 10 indicators are service quality, customer satisfaction, environment management, profitability, employee training, innovation, market share, return on assets (ROA), information technologies, and employee satisfaction.

Further research should be done mobilizing a panel of researchers from various relevant disciplines (ex.: marketing, economics, tourism management), expert consultants, and practitioners to confirm, add, or eliminate some indicators from the framework. This technique can be useful in reducing the biases that can occur in processing the indicators. Besides, as every study has its own limitations, the present study does not incorporate all article sources such as conference proceedings and book chapters.