The objective is to investigate the role government plays in tourism competitiveness and understand the relationship based on the Tourism Area Life Cycle model. We argue that tourism competitiveness is influenced not only by the governments' decisions but also by the stage of tourism development of the country. Countries characterized as tourism‐dependent will demonstrate higher levels of government engagement than those less dependent on tourism. Case study was employed, utilizing time‐series analysis. The results indicate that the role government plays in tourism competitiveness may depend not only on the level of freedom provided (proxy for government) but also on the stage of destination development. Copyright © 2017 John Wiley & Sons, Ltd.