For most children there is no way to get them excited about chess that works better than competition. It makes the games important and exciting and a lot of times it has a galvanizing effect on their overall chess learning. Students that enjoy chess already will get even more focused, while students that were lukewarm towards chess will start to get really excited.
There are certain considerations you should make as a parent before deciding. First, how well does you child know the rules? A child doesn't have to have chess strategy mastered to enjoy a tournament! They should be very familiar with the rules of moving pieces and capturing as well has have an understanding of what a checkmate and a stalemate are. They will also benefit by understand the relative value of the pieces, for instance that a queen is more valuable than a rook which is more valuable than a knight. The speed that children learn chess varies, and most are ready for tournament play before the end of their first year, assuming they've started as a complete beginner.
Another consideration that you must make as a parent is how well your son or daughter deals with winning and losing. Good sportsmanship can be one of the best lessons learned by activities like chess. Strangely, I've found kids in the 4-6 age range do better with sportsmanship than those in the 5-8 range. Maybe this is because the ego is not so much in play. Learning to lose gracefully and also to win gracefully are great lessons. If you child is struggling with these, competition may be a good way to learn it and it may be a good time for you to make your presence as a parent known.
After close to a decade of chess coaching, I've never encountered a child who didn't have fun at a tournament and win or lose, they will almost always want to go again!
Read more about chess tournaments from the Parents point-of-view