The Key Factors Affecting Development of Tourism Industry of Mongolia-An Application of AHP Approach

The Key Factors Affecting Development of Tourism Industry of Mongolia-An Application of AHP Approach

1st author: Nergui Erdenebat National Cheng Kung University Political Science Department National Cheng Kung University Tainan, Taiwan

2nd author: Wan-Tran Huang

Professor, Asia University Department of Business Administration

Asia University Taichung, Taiwan

Abstract International tourism in Mongolia is in modern term still in its infancy. The first international visitors arrived in 1994, when visas were finally available to international tourists. For all its socialist period, from 1924 until 1992, Mongolia was closed to the outside world. Today Mongolia is, measured by Gross Domestic Product (GDP), one of the poorest nations on earth. The primary foreign exchange earner of Mongolia is the export of minerals. Tourism is increasingly important to the national economy, providing not only hard currency earnings but also desperately needed employment. Stated government policy is the future development of tourism, especially the increase in foreign visitors and the contribution tourism makes to the national economy.

This study aims to investigate and determine the key factors affecting on development of tourism industry of Mongolia by taking survey from different group of people. This study used the Analytical Hierarchy Process (AHP) as the research method. To fulfill the objectives of this thesis, the researcher selected people who are tour company employees, professors, governors and experts in this field to take the survey.

The surveyed results showed that the according to opinions in terms of defining key factors affecting development of tourism industry of Mongolia of company employees, governors and experts (writers) are that Political factors are the most influencing factors. Besides, according to professors, the most influencing factors are Economical factors. The results also indicate that the development of tourism in Mongolia depends strongly on political and economic factors of the country.

KeywordsTourism industry, Key factors, Analytic Hierarchy Process, Mongolia

INTRODUCTION

It will introduce basically about the whole study from motivation and objective of the research, elaboration of questionnaires and analytical methodology.

Tourism is a travel for recreational, leisure or business purposes. The World Tourism Organization (WTO) defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited ". Tourism is one of the world's fastest growing industries as well as the major source of foreign exchange earnings and employment for many developing countries. Devised by WTO was endorsed by the UN Statistical Commission in 1993 following an International Government Conference held in Ottawa, Canada in 1991.

According to information from Mongolian Tourism Association (MTA), in 1995, 110,000 foreign visitors arrived in Mongolia, from over 50 countries, of which about 15,000 (13.61%) were organized as group tourists. Over 40.00% of visitors came from China, about 25.00% from Russia, 8.00% came from Japan, 2.00% from the Republic of Korea and 10.00% of visitors came from Western Europe. Around 90.00% of visitors from the neighboring Russia and China were businessmen (MTA, 1995). Tourism, especially adventure and ecotourism, has been recognized as a vital part of Mongolian economy since political and economic changes took place in 1990. In Mongolia, since we are only tourist receiver, not tourist supplier for the international market, our tour operators also play leading role in terms of actual tourists flowing into the country and income generation.

MOTIVATION

As tourism industry continues to grow its traditional image, considered as a leisure activity which does not harm the environment or culture at the destination, beginning to change. Moreover it tends to show negative impacts on social-cultural, environmental as well as economical aspects particularly those developing countries. Well preserved nature, historical sites and closer integration with local peoples are basis for a high quality holiday product and tourism industrys long term business success. In addition, this tourism industry greatly depends on resources.

On the other hand, Mongolia suffers from many obstacles to tourism development, many of them stem from Mongolia's isolated location, climate, and the poor state of travel infrastructure conditions. For an average tourist this means a destination that is expensive to reach and hard to get around upon arrival. For tourism companies, the short season makes it hard to save enough income to reinvest in growth. Private companies and the government in this industry have different ideas about the difficulties of the industry. From the private sections view, government policies are weak as it does not encourage redistribution of economic and social benefits and of tourism to the local levels, while management of protected areas and natural resources

encourage centralization, rather than local management and preservation processes. Another challenge is the current structure of supply chains in the industry, which lacks strong local economic linkages, including service linkages (guiding services, horse rental, etc.), and cross-sectored linkages (food services and local suppliers). But, on the other hand, from the government view, great number of tour operators, with unprofessional management skills ( even some does not have basic knowledge about Tourism industry ), established only for economical reason they tend to break their promise and provide poor service for our potential tourists. This tendency likes to decrease overall Mongolian tourism product quality and destination image at the international tourism market. Many of the countrys key natural and cultural heritage sites are under threat from economic interests, unmanaged development or acts of destruction, and lack of proper management.

Therefore, there is a great need to analyze Mongolian tourism industry, to compare opinions of four group of respondents, to suggest policy implication based on the results of the survey and to make a suggestion. The concluding statement will be presented together with some recommendations for best possible way to develop tourism industry in Mongolia in terms of research framework factors.

OBJECTIVE

The overall objective of this research is to analyze the key factors affecting the tourism industry of Mongolia. There are some detailed objectives listed as following:

• To analyze the current situation of tourism industry of Mongolia.

• To compare opinions of four group of respondents, i.e., governors, professors, writers and company employees.

• To suggest policy implications based on the results of the survey.

• To make some suggestions for promoting development of tourism industry of Mongolia.

  RESEARCH METHOD

  As there are two different research method, quantitative and qualitative, this research uses quantitative research method. The Analytic Hierarchy Process (AHP) model is used as a tool to get the responses from the subjects. The Analytic Hierarchy Process (AHP) as one of Multi Criteria Decision Method (MDCM) families was taken into consideration. AHP methodology is implemented in the software package Expert Choice. With its hierarchical structure, AHP can be used for decision problems with lower complexity if the sub-criteri can be clearly separated and have no interconnectivity. AHP was first described by Saaty (1982) and he published a myriad of books and journal articles about that topic. AHP helps to rank the importance of several alternatives based on experts opinions (Isiklar and Buyukozan, 2007) and according to Saaty (1990c) helps decision-makers making decisions. This is achieved through pair wise comparison of all items of the same level.

  SURVEY METHOD

  The survey methodology, which was used to determine key factors affecting on development of the industry, was through research literature, questionnaire with expert choice software, documentation analyzes.

  1. The initial step consisted of searching for existing studies or literatures focusing on tour operating business both international and Mongolian field. Most of existing research found overall tourism industry and its impacts. Thus literature focusing on tour operators is limited.

  2. Contacted tourism bodies Mongolian Tourism Board ( MTB ) and Mongolian Tourism Association ( MTA ) requested some tour operators annual business reports and activities as well as their email addresses. The information I requested was not available in public and reluctant to supply it through email.

  3. Visited Mongolian tour operators, government organizations and universities websites and made analyze their field of activities, product feature so on.

  4. Established a general questionnaire applying Analytic Hierarchy Process (AHP) and send it in electronic form. The purpose was to determine the opinion of four group of respondents to determine the key factors as mentioned above.

  5. Finally all the data were collected from literature study, data search and survey questionnaire responses were compiled and analyzed for concluding remarks.

     DATA SOURCE

     Primary research consists of the collection of original primary data. It is often undertaken after the researcher has gained some insight into the issue by reviewing secondary research or by analyzing previously collected primary data. In conducting this research, the researcher uses survey method by distributing the questionnaires to gather primary data from the respondents of tourism company, university and the government.

     The survey was conducted by using questionnaire that includes statements. The respondents respond to those statements using AHP construct measurement. As mentioned above, this survey was conducted in Mongolia from January to February, 2013, from company employees who are top level managers at one of the biggest tour operators in Mongolia, professors who are lecturers at the biggest tourism and marketing university in Mongolia, governors who work in Ministry of Tourism of Mongolia and experts who have done several research in this field.

     Then after all questionnaires completed then the researcher needs to do Expert Choice computation to get the results and compare them.

     To better understand AHP hierarchies, consider a decision problem with a goal to be reached, three alternative ways of reaching the goal, and four criteria against which the alternatives need to be measured. Such a hierarchy can be visualized as a diagram like the one immediately below, with the goal at the top, the three alternatives at the bottom, and the four criteria in

     between. There are useful terms for describing the parts of such diagrams: Each box is called a node. A node that is connected to one or more nodes in a level below it is called a parent node. The nodes to which it is so connected are called its children. Applying these definitions to the diagram below, the goal is the parent of the four criteria, and the four criteria are children of the goal. Each criterion is a parent of the three Alternatives. Note that there are only three Alternatives, but in the diagram, each of them is repeated under each of its parents.

     There will be 5 respondents who are governors work in the government in field of tourism industry, 5 respondents who are professors related to the industry, 5 respondents who are experts and 5 respondents who are company employees. Following is an example of a set of questions from the survey:

     Question 1: How important is item 1 compared with item 2 to you? Question 2: How important is item 1 compared with item 3 to you? Question 3: How important is item 1 compared with item 4 to you? Question 4: How important is item 2 compared with item 3 to you? Question 5: How important is item 2 compared with item 4 to you? Question 6: How important is item 3 compared with item 4 to you?

     LITERATURE REVIEW AND THEORETICAL FRAMEWORK

     This chapter reviews the overview of study documents previously which had been researched, definition and research methods used. In this chapter the theory of factors affecting on development of tourism and theoretical framework for the research is presented. The theoretical framework constitutes a base for the continuing work with the analysis of the research with an application of Analytical Hierarchy Process (AHP) approach.

     According to a research by Mill and Morrison (1992), tourism is series of activities which is happen during the tourist`s trip and includes any activities such as travel planning, travel to a destination, residing, returning and recalling its memories. As well as it can be consisted of all tourist`s actions which is done as a part of its travel like purchasing different products and interactions between host and guest, generally, all actions and interactions which is happen during a trip can be considered as tourism.

     Peter (2006) mentioned that if tourism in Mongolia is to increase its contribution to the national economy and continue developing, this thesis recommends that the collection of detailed visitor data should become a main objective for all stakeholders. The collection of detailed tourism data is an essential starting point to better overcome the other three pressing challenges facing tourism in Mongolia today. The result of the research is that recommends to make the extension of the short summer tourist season a strategic objective, to implement crime reduction measures such as the establishment of a tourism police unit and to overhaul the domestic air transport sector.

     Concluding based on the prior literature review with several authors about tourism industry of Mongolia, as today tourists seek remote, unspoiled places and in this context tourism can bring social and economic development to locations where no other economic activities take place. The researchers knew that developing tourism sector in Mongolia could be one of the key to economical development of the country. On the other hand, the researchers recommend that make the extension of the short summer tourist season a strategic objective, to implement crime reduction measures such as the establishment of a tourism police unit and to overhaul the domestic air transport sector.

     Elahe and Fateme (2010) made a research on investigating factors affecting the development of tourism industry in Iran. This research aims to study the importance of public participation in tourism development in Iran. It is initially dealt with the phenomenon of tourism and its importance, then such factors influencing the development of tourism industry as security, citizen participation, media and information technology are stated and a conceptual model for the research is offered. It is concluded that public involvement results in better decisions and community decisions that involve citizens are more likely to be acceptable to the local people. Also, the role of government in providing security and the role of media and information technology was proved to be significant in development of tourism industry in the country.

     Marn and Shan (2013) made a research on perceived critical success factors for the tourism industry of Penang island: A supply perspective. The aim of this study is to examine and identify the major critical success factors that are crucial in the successful developent of the tourism industry of Penang Island. The researchs initiative was driven primarily by the average tourism performance of the destination in recent years based on through observation in tourist arrival, receipts, and length of stay in comparison with the joint heritage status city of Malacca. The findings suggest that the authority and relevant stakeholders in the industry should provide greater emphasis and effort in developing competence and strengths in these identified factors in order to improve overall destination competitiveness locally as well as globally.

     THEORETICAL FRAMEWORK

     Tourism consists of a complex system of activities and services which have numerous inter-relationships with other economic, environmental and social sectors. Developing sustainable tourism pre-supposes an understanding of the complexity and characteristics of this tourism system. The key factors affecting on development of tourism sector consists of five different intangible asset dimensions. These assets include 1) Economical factors, 2) Political factors, 3) Socio-cultural and environmental factors and 4) Technological factors. (Freyer, 1995)

     RESEARCH FRAMEWORK

     Based on the theoretical framework described a research framework with AHP-Model. It has three levels as can be seen on Figure 1. The first level is the research topic Key factors affecting on development of tourism sector of Mongolia. On the second level, there are four criteria.

     Key factors affecting on development of the tourism industry

     Key factors affecting on development of the tourism industry

     1. Economic factors

     2. Political factors

     3. Socio-cultural and environmental factors

     4. Technological factors

This research model divides the assets that build the key factors effect on development of tourism industry into four categories: economic factors, political factors, socio-cultural and environmental factors and technological factors. These categories are the fundamental cornerstones and symbolize crucial pieces in the process of enhancing the key factors effect on development of tourism industry.

SURVEYED RESULTS

The respondents are divided into four groups which are: company employees, professors, governors and experts. The first step is to evaluate the demographic data, then analyze consistency ratio of respondents before AHP computation.

The result from the categorizing statements concerning gender and the amount of the respondents who are professors, company employees, governors and experts in tourism sector. There are total of 10 respondents and the gender distribution is 6 male (60.00%) and 4 female (40.00%). As seen in the table, male represent approximately two thirds of the total sample. In terms of age 1 out of 10 respondents is 18-24 years old (10.00%), 2 respondents are 25-30 years old (20.00%), 5 respondents are 31-40 years old (50.00%), 1 respondents are 41-50 years old (10.00%). In summary, half of them are in the middle age from which is 31-40 years old.

According to the demographic survey, most of governors were male compared to another group of respondents and group of writers and governors were older according to their age. There were more respondents who are single in company employees' group because that they were younger compared to another groups. All of the respondents were high educated people and most of them were full time employees.

COMPANY EMPLOYEES

From the computation of the matrix, Political factors scores the highest with 57.70% followed by Economical factors with 16.20%.

The third ranked criteria is Socio-cultural and environmental factors that scored 14.80% and the least important one is Technological factors with 11.30%. All of that are described in the table of the priority with respect to Factors affecting on development of tourism sector of Mongolia.

According to the result, company employees' opinion is that Political factors are the most influencing factors on development of tourism industry of Mongolia. It is possibly that as mentioned above, co-operation of the government and private companies is not that good.

PROFESSORS

There are six pair wise comparison matrices in the table above. The consistency ratio of this comparison is 0.21 lower than 0.1 which means it can be accepted. Then the weights to obtain scores and hence rankings are showed in the table.

From the computation of the matrix, Economical factors scores the highest with 34.60% followed by Political Factors with 24.00%. As can be seen from above, the third ranked criteria is Socio-cultural and environmental factors that scored

23.00% and the least important one is Technological factors with 18.30%. All of that are described in Figure 4-2 with a diagram of the priority with respect to Factors affecting on development of tourism sector of Mongolia.

Unlike opinion of company employees, professors preferred Economical factors as the most affecting criteria to development of tourism industry of Mongolia. It is possibly that they think it is important to have good service, goods and so on in this field to have an image of destination.

GOVERNORS

There are six pair wise comparison matrices in the table above. The consistency ratio of this comparison is 0.01 lower than 0.1 which means it can be accepted. Then the weights to obtain scores and hence rankings are showed in the table.

From the above, it can be seen that the third ranked criteria is Technological factors that scored 20.20% and the least important one is Socio-cultural and environmental factors with 17.40%. All of that are described in Figure 4-22 with a diagram of the priority with respect to Factors affecting on development of tourism sector of Mongolia.

According to the survey result from governors, similar to company employees, they preferred Political factors as the most affecting factors which shows that they think it is necessary to have good laws, planning, affordable interests and low lobbies to have a good condition in the field.

EXPERTS

There are six pair wise comparison matrices in the table above. The consistency ratio of this comparison is 0.01 lower than 0.1 which means it can be accepted.

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Then the weights to obtain scores and hence rankings are showed in the table. From the computation of the matrix, Political factors scores the highest with 43.70% followed by Economical Factors with 22.50%. The third ranked criteria is Technological factors that scored 17.10% and the least important one is Socio-cultural and environmental factors with 16.70%. All of that are described in the figure with a diagram of the priority with respect to Factors affecting on development of tourism sector of Mongolia. Unlike professors and similar to company employees and governors, experts (writers) selected Political factors as the most influencing factors among level two criteria. The possible reasons are mentioned above. From the explanation above, it can be concluded that the priority results of determining the key factors affecting on development of tourism industry of Mongolia items from the four group of respondents are almost interpreted the same way which means that the three out of four groups (company employees, governors, experts) responded that the Political Factors is the most preferred key factor from development of tourism in Mongolia while Professors responded Economical Factors are the most preferred factors. According to survey results from company employees and professors Technological Factors is the lowest preferred factors among level two criteria. But professors and experts responded that the lowest preferred factors are Socio-cultural and Environmental Factors.

SUMMARY

In Mongolia, tourism should be supported and promoted as a means to ensure sustainable economic development and positive social effects, preserving and protecting the environment and heritage. According to World Tourism Organization, sustainable tourism development requires the informed participation of all relevant stakeholders, as well as strong political leadership to ensure wide participation and consensus building. Mongolia's economic development is subject to the powerful twin influences of distance and isolation and tourism can overcome some of the development constraints caused by these two factors. Tourism also has the advantage that isolation in itself can form an attraction and has the power to support economic and social development outside of the present economic centers of the country (wide spaces of Mongolia's countryside with the mix of nature and culture). Today, tourists seek remote, unspoiled places and in this context tourism can bring social and economic development to locations where no other economic activities take place (like Khovsgul area). In order to develop tourism sector of Mongolia with a better management, it is important to know the key factors affecting on development of tourism of Mongolia.

Based on the literature review described a research framework for this research with AHP-Model. This research framework is used as research model that has three levels. The first level is the research topic Key Factors Affecting on

Tourism sector of Mongolia. There are four categories which are: Economical factors, Political factors, Socio-cultural and environmental factors and Technological factors. The relation of level three items with level two items was based on the findings of the literature review, especially from the Freyer, 1995 model. By using the Analytic Hierarchy Process (AHP), the research wants to find out how the different four groups of survey takers who are company employees, professors, governors, experts in tourism sector of Mongolia would value key factors affecting on development of tourism sector and how they would rank each factor with different features. Therefore, the researcher could compare the results and identify which factors are the most important, which are less important and the difference between perception of these four groups. In order to do computation Expert Choice Software was conducted in the following steps:

1. Creation of a comparison matrix after the survey was conducted. The corresponding values need to be filled into the comparison matrix and the reciprocal values need to be computed.

2. Computation of the weights of each item.

3. To further investigate the consistency of the data, consistency ratio should be 0.10 or less to be considered as acceptable.

4. Calculate the priorities by adding the elements of each column and dividing each entry by the total of the column. Average over the rows of the resulting matrix and you have the priority vector.

   After going through those steps, then the priority of the elements of key factors affecting on development of tourism sector can be defined. The next is the priority comparison between company employees, professors, governors and experts. From this step, it can be determined whether they interpret the perceptions in the same way or not.

   The overall C.R from company employees was 0.03, from professors it was 0.02, from governors C.R was 0.04 and from experts C.R was 0.2 which are considered as acceptable because all values are less than 0.10. Furthermore, the surveyed results showed that the opinion from professors in terms of determining the key factors affecting on development of tourism of Mongolia is totally different with another three group of respondents' opinion. As we can clearly see from the overall results, the most important level two criteria from company employees, governors and experts is Political Factors. Improving laws, interests and lobbies in tourism industry is the response to the changing environment of the tourism industry. Tourism companies and institutions are nowadays required to implement drastic management changes: they should adopt a systemic approach and become actively involved in formal and informal networks in order to increase efficiency, product and service quality, to decrease lobbies and interests. The government should revise laws in terms of tourism industry to gain a sustainable edge and face the competitive context of international tourism. Tourism companies should better understand benefits from establishing more formal and structured collaboration (not only sporadic collaboration, based on present needs, like exchanging drivers or guides for a certain tour). For tourism companies it is necessary to understand that creating networks with the government, they can improve their business performance and competitiveness, market position, joint promotion options can be developed (less marketing costs for a single operator), training possibilities could be improved, information and experience exchange is easier, dialogue and cooperation with other stakeholders in tourism sector is facilitated and new tourism products development would also become easier.

   Besides, according to the survey result from professors, Economical factors are the most influencing factors on the development of the sector. Tourism sector in Mongolia is strongly characterized by lack of skilled staff at different levels, affected also by high seasonality of Mongolian tourism sector. Lack of knowledge and skills is a problem that goes throughout the whole tourism sector, from the management level, to the operational staff. Of course, the problem is most felt on operational level, where direct contacts with tourists clearly demonstrate the professional level of employed staff. Training opportunities in Mongolian tourism sector are limited also by lack of professional training institutions with training programs prepared on the basis of existing training needs. For example, the knowledge of foreign languages, at least English, is urgently to be improved (waiters, receptionists, drivers, shop assistants, etc.). The staff cannot satisfy tourists needs if there is no or bad understanding between them. Goods and services will be improved with skilled labors.

   The present survey indicates that the development of tourism in Mongolia depends strongly on political and economic factors of the country.

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