Destination Development and
Institutionalization Strategies
In the OIC Member Countries
33
to identify and recruit potential members through the creation of a benefit package that is
perceived as “worthwhile” to those potential members. 104
 Tourism Improvement District (TID) generates revenue through self- assessed fee contributions
by industry players, such as hotels, restaurants, attractions, car rentals, to a mutual fund that is
generally administered by DMOs. 105
 Partnerships, where the tourism industry contributes to the DMO to fund certain activities such as
sales missions, travel fairs, and familiarization tours. In some instances, as in the co-fundingmodel,
these activities receive seed funding from the government which is then matched by the private
sector industry players. 106
 Sponsorships, where private companies contribute to DMOs budget in return for being included
in their promotional materials, are an important source of private funding, however, they do not
provide sustainable long-time revenue. 107
 Visitor information centers can generate revenue for DMOs through commission on sales for single
industry players or for a group of industry players as in the case of city cards/passes that enable
tourists to visit a number of attractions, however, this revenue stream generally generates modest
returns even with high turnover especially since the labor cost at those centers are usually high
and the offerings are mostly low-cost items. To increase visitor center profitability, destination
managers can create preferred supplier agreements where they get higher commissions from a
specific supplier in each product category in return for better display of their brochures and other
promotional materials. However, this option may not be feasible for visitor information centers
that receive government funding since they should not in this case be giving a preferential
treatment to some suppliers at the expense of others. 108
 DMOs can engage in a number of commercial activities to fund their operations such as event
hosting through convention centers, publications sales, and collection of service fees from industry
players or fees from management of tourist attraction. 109 DMOs can also collect royalties on sale
of items featuring their logo. In some instances, where legislation permits, DMOs can create their
own travel department which can be licensed as a private company and its revenues used to fund
the DMO activities, as in the case of Australia’s Tourism Queensland which established its
wholesale travel division.110
Under the Co-funding model, tourism industry players contribute to DMO funding by matching funds
provided by the government.111 DMO, following this model, receive funding from both private and public
revenue streams, which is quite common according to findings from the case studies. Leading DMOs
around the world are diversifying their funding sources to ensure sustainability. The following table
summarizes sources of funding for a number of destination management organizations around the globe.
104 Ritchie, J.R. and Crouch, G. I. (2003). The Competitive Destination: A Sustainable Tourism Perspective.
105 Nissen, A. (2016). Destination funding models: Can DMOs seek financial stability from their governments? Retrieved from
106 Pike, S. (2008). Destination Marketing: an Integrated Marketing Communication Approach. London: Routledge.
107 Ritchie, J.R. and Crouch, G. I. (2003). The Competitive Destination: A Sustainable Tourism Perspective.
108 Pike, S. (2008). Destination Marketing: an Integrated Marketing Communication Approach. London: Routledge.
109 Destination Marketing Association International (2015). DMO Organizational and Financial Profile Study. 1-40
110 Pike, S. (2008). Destination Marketing: an Integrated Marketing Communication Approach. London: Routledge.
111 Nissen, Aaron. (2016). Destination funding models: Can DMOs seek financial stability from their governments? Destination Think
Website.