Global Tourism and Technology Sectors, Swot Analysis
GLOBAL SWOT ANALYSIS A report produced for TOUREG Project, Deliverable D. 2. 1 by the Department of Tourism Management of the Alexander Technological Educational Institute of Thessaloniki, Greece and the Technical University of Crete, Greece Research Team, A. T. E. I Thessalonikis Spyridon Avdimiotis, MBA Christina Bonarou, PhD Athanasios Dermetzopoulos, MSc Ioannis Karamanidis, PhD Thomas Mavrodontis, PhD Research Team, T. U. C. Vassilios Kelessidis Elisavet Kalonaki October 2009 CONTENTS Contents 1. 2. 3. 4. 4. 1 4. 2 5. 6. 7. 7. 1 7. 2 8. 9. 9. 1 9. 2 9. 9. 4 9. 5 9. 6 10. Executive Summary .......................................................................................... 6 Introduction...................................................................................................... 16 A brief history of tourism.................................................................................. 18 The economic evolution of tourism.................................................................. 19 The Fordist concept ............................................................................. ........ 9 Post- Fordism .............................................................................................. 21 Destination’s stakeholders and their directions ............................................... 22 The global tourism and hospitality industry ..................................................... 24 Geographical tourism flows and seasonal concentration ................................ 30 Geographical tourism flows ......................................................................... 31 Tourism seasonal concentration.................................................................. 4 Tourism demand trends .................................................................................. 37 Innovation trends on Information and Communication Technologies ............. 44 ICT Innovation and Tourism ........................................................................ 48 A collection of very interesting web sites ..................................................... 52 Grid computing and p2p networks and clusters........................................... 54 Smart phone systems and impact on tourism.............................................. 55 Web 2. applications and their impact on tourism industry ......................... 57 ICT trends and Tourism future..................................................................... 60 Innovation trends on Energy Technologies ..................................................... 61 10. 1 Innovative energy technologies ................................................................... 61 10. 2 Case Studies – Energy technologies........................................................... 66 11. Innovation trends on Environmental Technologies ......................................... 2 11. 1 Innovative Environmental Technologies ...................................................... 72 11. 2 Case studies - Environmental technologies................................................. 73 12. Policies and initiatives for innovation in tourism industry ................................ 77 12. 1 Tourism networks and information distribution. Innovation policies against imitation. ................................................................................................................. 81 12. Policies and initiatives applied in the ICT sector.......................................... 83 12. 3 Policies and initiatives applied in the energy and the environmental technologies sector ................................................................................................. 83 12. 4 Specific Initiatives ........................................................................................ 89 2 13. Summaries - Regional Tourism Reports ......................................................... 98 13. Regional Report for South West Oltenia- Mehedinti County ....................... 98 13. 2 Regional Report for South West Region of Bulgaria ................................. 102 13. 3 Regional Report for Crete.......................................................................... 105 13. 4 Regional Report for Madeira...................................................................... 110 13. 5 Regional Report for the Balearic Islands ................................................... 115 14. 15. 16.
Conclusions................................................................................................... 120 References .................................................................................................... 127 Additional Bibliography.................................................................................. 136 3 Preface The TOUREG (Competitiveness and Knowledge in the Tourism Sector) Project aims to improve the competitiveness and strategic position of the service sector and in particular the tourism-oriented sectors in various European regions.
This will be achieved through the establishment of a platform for knowledge transfer based on technological innovation and research in the tourism sector. In more details, the strategic objective of TOUREG Project is to establish a platform for developing a competitive tourist industry based on the generation and application of knowledge revolving around a new international research-driven cluster in the tourist industry.
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Based on this strategy, the TOUREG Project’s general objectives are to: Adapt and to strengthen the R&D+I public policies, especially policies for or related ones to the tourist sector. Establish an itinerary for the generation and transfer of R&D+I knowledge in the tourist sector. Promote, diversify and specialize in R&D+I activity in the tourist sector. Facilitate the establishment of a platform for the generation of knowledge in the tourist sector. Increase productivity in the tourist sector. Exchange experiences between the participating regions and countries.
The TOUREG project is coordinated by the Directorate General for Research, Technological Development and Innovation of the Government of the Balearic Islands, and involves partners from six regions in Spain, Portugal, Greece, Sweden, Bulgaria and Romania. The Project Partners are the following: ARC Fund (BULGARIA), Foundation for Research & Technology (FORTH) / Science & Technology Park of Crete (STEP-C) and Technical University of Crete (TUC) (GREECE), Madeira Technopolo, AREAM and Expedita (PORTUGAL), CG&GC (RUMANIA), Regional Government of the Balearic Islands, IBIT Foundation, GIT Consultors (SPAIN), CDT - Lulea University (SWEDEN).
The Project is financed by the 7th FRAMEWORK PROGRAMME, under the specific Capacities Programme, through the Regions of Knowledge Initiative (ROK) with duration from 1 January 2008 to 30 June 2010. 4 The Vice-President of the European Commission, responsible for Enterprise and Industry, G. Verheugen 1 , addressing the European Tourism Ministers’ Conference in 2006, admitted that not many financial instruments were aimed at impacting specifically tourism and indicated that the Commission was working towards integrating tourism in all related Community policies.
Thus, for R&D on tourism, the focus of European Commission was even less. He stated that he was confident that ‘tourism will profit from the support of the European Regional Development Fund, the Cohesion Fund, European Social Fund, the European Agricultural Fund for Rural Development, the European Fisheries Fund, and from programmes such as the 7th Framework Programme for Research and Technological Development, the “Leonardo da Vinci” or the proposed Competitiveness and Innovation Framework Programme’.
Based on the above, TOUREG may be considered as a direct outcome of this approach, as it is for the very few times that a considerable effort has been undertaken and fully supported by the European Commission on setting up a framework for establishing R&D policies and research clusters which can help tourism industry. It is proved also by the fact that TOUREG has been promoted in the research@eufocus 2 in 2008 as one of the supported projects for achieving sustainable tourism in Europe.
This is the main objective of TOUREG and this report is one of the deliverables of the project. It is hoped that this document together with all other deliverables of the project will achieve the original objective, which is to increase the amount of effort devoted on R&D in tourism industry in Europe. 1 Verheugen, G. , 2006. Tourism – Key to Growth and Employment in Europe, Speech delivered at the European Tourism Ministers’ Conference, Vienna, 21 March, http://fiabrussels. deum. com/download/news/speech_verheugen_tourism. pdf 2 research*eu focus supplement, 2008. Competitiveness & sustainability in European tourism, Toureg: a platform to create and transmit tourism knowledge, page 8. 5 1. Executive Summary The TOUREG Project (Competitiveness and Knowledge in the Tourism Sector) aims to improve the competitiveness and strategic position of the service sector and in particular the tourism-oriented sectors in various European regions.
This will be achieved through the establishment of a platform for knowledge transfer based on technological innovation and research in the tourism sector. In more details, the strategic objective of TOUREG Project is to establish a platform for developing a competitive tourist industry based on the generation and application of knowledge revolving around a new international research-driven cluster in the tourist industry.
Based on this strategy, the TOUREG Project’s general objectives were set to adapt and to strengthen the R&D+I public policies, especially policies for or related ones to the tourist sector, to establish an itinerary for the generation and transfer of R&D+I knowledge in the tourist sector, to promote, diversify and specialize in R&D+I activity in the tourist sector, to facilitate the establishment of a platform for the generation of knowledge in the tourist sector to increase productivity in the tourist sector and to exchange experiences between the participating regions and countries.
The TOUREG project is coordinated by the Directorate General for Research, Technological Development and Innovation of the Government of the Balearic Islands, and involves partners from six regions in Spain, Portugal, Greece, Sweden, Bulgaria and Romania. The Project Partners are the following: ARC Fund (BULGARIA), Foundation for Research & Technology (FORTH) / Science & Technology Park of Crete (STEP-C) and Technical University of Crete (TUC) (GREECE), Madeira Technopolo, AREAM and Expedita (PORTUGAL), CG&GC (ROMANIA), Regional Government of the Balearic Islands, IBIT Foundation, GIT Consultors (SPAIN), CDT - Lulea University (SWEDEN).
The Project is financed by the 7th FRAMEWORK PROGRAMME, under the specific Capacities Programme, through the Regions of Knowledge Initiative (ROK) with duration from 1 January 2008 to 30 June 2010. Vice-President of the European Commission, responsible for Enterprise and Industry, G. Verheugen, addressing the European Tourism Ministers’ Conference in 2006, admitted that not many financial instruments were aimed at impacting specifically tourism and indicated that the Commission was working towards integrating tourism in all related Community policies.
Thus, for R&D on tourism, the focus of European Commission was even less. He stated that he was confident that 6 ‘tourism will profit from the support of the European Regional Development Fund, the Cohesion Fund, European Social Fund, the European Agricultural Fund for Rural Development, the European Fisheries Fund, and from programmes such as the 7th Framework Programme for Research and Technological Development, the “Leonardo da Vinci” or the proposed Competitiveness and Innovation Framework Programme’.
Based on the above, TOUREG may be considered as a direct outcome of this approach, as it is for the very few times that a considerable effort has been undertaken and fully supported by the European Commission on setting up a framework for establishing R&D policies and research clusters which can help tourism industry. Mr. Verheugen has continued to focus on tourism industry and the means to make it more competitive.
Very recently (October 9, 2009) he presented the greatest challenges to be faced by tourism industry, these being, tourism must be part of knowledge economy with all leisure and hotel services to be found easily via the web while the industry should work towards removing all inconsistencies between complimentary tourist services and invest on people skills which can increase productivity together with innovation capacity. TOUREG tries to answer these questions and present some of the means for tourism industry to face these challenges.
An extensive analysis, based on bibliographic information but also on the primary research from the six participating Regions, presented as Regional reports, has been carried out about the trends on innovation for tourism. More particularly, emphasis has been placed with regards to the innovation trends on products and services with respect to Innovation and Communication Technologies, Energy technologies and Environmental technologies, the main themes which TOUREG has focused on. A brief historical review on tourism is given followed by the presentation of economic evolution.
An analysis of the major stakeholders is presented, the government, the regional authorities and private enterprises, with their characteristics, attempting to describe the means by which they are interconnected and interact, as it is a common product they want to promote and make the optimal benefit out of it. An analysis of the global tourism today is then presented. Tourism is one of the biggest and fastest growing industries in the world. According to the World Tourism Organization (UNWTO), in 2008, international tourist arrivals eached 924 million. By the year 2010 international arrivals worldwide are expected to reach 1 billion. If domestic tourists are added to the above figure, total tourist arrivals can well 7 be over 3 billion. According to the World Travel and Tourism Council (2009), the contribution of Travel & Tourism to Gross Domestic Product (GDP) is expected to rise from 9. 4% (US$5,474 bn) in 2009 to 9. 5% (US$10,478 bn) by 2019, the contribution of the Travel & Tourism economy to total employment is expected to rise from 219,810,000 jobs in 2009, 7. % of total employment, or 1 in every 13. 1 jobs to 275,688,000 jobs, 8. 4% of total employment or 1 in every 11. 8 jobs by 2019, real GDP growth for the Travel & Tourism economy is expected to be ~3. 5% in 2009, down from 1. 0% in 2008, but to average 4. 0% per annum over the coming 10 years and export earnings from international visitors and tourism goods are expected to generate 10. 9% of total exports (US$1,980 bn) in 2009, growing (in nominal terms) to US$4,132 bn (9. 8% of the total) in 2019.
Thus, the role tourism plays to Regional and National economies cannot be understated. In Europe, most recent data show that approximately 340,000 companies operate in the accommodation and travel organisation sectors, which provided jobs for nearly 2. 8 million people in 20062. This equates to 1. 2% of total employment in the EU-27 and a total turnover of €290 billion. With more than 90% of the companies concerned employing fewer than 10 people, “micro-enterprises” form the backbone of the industry.
The total tourist arrivals by region shows that by 2020 the top three receiving regions will be Europe (717 million tourists), East Asia and the Pacific (397 million) and the Americas (282 million), followed by Africa, the Middle East and South Asia. Tourism activity gives birth to both spatial and seasonal concentrations. Based on the intensity or quality of tourism, the concept of seasonal concentration describes the unevenness or fluctuation during the course of a year, with the ‘season’ including (at least one) peak period which is caused by two basic elements, one “natural” and one “institutionalized”.
The natural aspect of seasonality is related with natural phenomena such us rainfall, sunlight, temperature etc. and the seasons of the year, while the institutionalized element refers to social factors and policies concerning specific customs and legislated vacations, impacting dramatically productivity, employment, cash flows but also infrastructure and environmental consequences, with huge demans particularly in the summer period. Mass tourism (70% of market share today) grew rapidly in the 60’s and 70’s mainly as a result of improvements in technology and transports and of increased disposable incomes.
It was centered in North American and Western European destinations, and some island destinations such as the Caribbean. Mass tourism was –and still is– dominated by Tour Operators offering low cost, standardized package tours, mainly to destinations ideal for 3S “Sea, Sun, Sand” vacations. A very recent 8 study for tourists in Crete has shown that 85% of the tourists come here for the 3S’s. Mass tourism has been characterized by local income revenues being concentrated in densely packed tourist destinations that employ migrant labor from the hinterland and abroad.
Local skills capacity remains low, with more skilled, management jobs often being carried out by ex patriots. However, tourism consumption patterns do change. Tourism demand trends since the mid-80’s reflect the increasing diversity of interests of the late-modern leisure society with the emergence of Special Interest Tourism (SIT) revealing the new values which include ‘increased importance of outdoor activities, awareness of ecological problems, educational advances, aesthetic judgment and improvement of self and society.
This has also surfaced in the very recent (October 2009) study commission by EC where it is found that consumers will be more demanding, looking for comprehensive travel experiences and value for money. What is the profile of this customer? Nearly half of all international tourist arrivals are motivated by leisure, recreation and holidays (51%) (data for 2008). Business travel accounted for some 15%, and 27% represented travel for other purposes, such as visiting friends and relatives, religious reasons/pilgrimages, health treatment, etc.
The rebound of tourism activities will reveal the trend of increased specialization among travellers, which will be seeking personalized, unique experiences, in terms of adventure, culture, history, archaeology, bird watching, diving and interaction with local people which represent a shift from escapism to enrichment. In the short to medium term there is almost certain that travellers will be spending less on travel. The demand for the luxury end of the market is likely to decrease while demand or either low cost or perceived good value products for services is likely to grow, a trend that airlines and hotels especially need to rapidly adapt to. This has been seen also in the EU study of October 2009. Modern tourists search “value for money”. This implies an increased competition between destinations and operators within the frame of a globalised market and in this respect the investment in new technologies and direct distribution channels will be the key to success. Tourism has unique characteristics that differentiate it from other industries which have their own distinct products or services.
Tourism usually includes multiple products or services, which involve the co-operation of several suppliers; it is not a homogeneous market. Tourism is a heterogeneous sector which consists of several product fields, albeit ones which have a degree of linkage. Like other fields, tourism involves both goods and services, but the service component is relatively very high. 9 As competition increases in the market, tourism businesses and organisations have found that improving service quality and visitor satisfaction are key factors in increasing market share.
Yet, it is not clear to these businesses and organisations which of the two constructs is the means to an end, or, even whether they are separate constructs. Tourism firms, operate in a business environment where innovation is important for their survival. Globalization of tourism activities, the application of information technologies in tourism firms and the changes in tourism demand and attitudes, all create a dynamic sector where innovation has become of central importance.
Innovation in tourism has been in the recent past secondary and capital scarce and for this reason was excluded from the scope of government interest and actions. However, there has been a shift, with European Union leading the way but also national governments following suite. It should be well understood that tourism industry is not very intensive on R&D, rather they invest on technology supply. For e. g. businesses in Baleares islands have reported R&D expenditure on innovation efforts of only 0. 36%.
Thus innovation in tourism industry is driven by suppliers of technology and of innovative products and certainly by governmental financial support. The challenge for the companies is then on how to absorb technology and innovative products and make optimal use of them. In other words, it turns out to be really a problem of internal training and the absorption capacity of the firm. The good news is that the industry is information intensive and hence owners and managers are open to possible solutions with IT investments and in particular when they are packaged as ntegrated solutions. Emphasizing then innovation trends on the Information and Communications Technologies it is well recognized that tourism has been and will be one of the most impacted industries by ICT innovations. A lot of upcoming IT innovations will relate to the vision of “Ambient Intelligence” that has been shaped by the European IT research. The customer will change his or her position and become a consumer with more active role. Hence, there will be more possibilities of service customization and product configuration.
In addition, flexibility during the trip will be increased and travellers will have the possibility to book ad hoc services. Implementation of software for optimized business productivity, such as TQM, CRM, SCM, using applications over the market, which is the norm for most tourism based companies, creates major difficulties for hotels and tourism businesses because they cannot differentiate between competitors. Thus hotels and hotel 10 managers can only differentiate through optimal implementation. This shows the requirements for differentiation and the need for provision of the company’s touch.
In a relevant study it was shown also that tourist companies having web sites have increased their revenue, but the ones who had their own web site and not using another’s portal, had even higher revenues. ICT technologies and use of the Internet has been changing the way tourism businesses operate. Electronic intermediaries are emerging dynamically and challenge traditional distributors. Thus all tourism players are forced to rethink their business models. For example, many tourism organizations aim to bypass all intermediaries that add cost to their production and distribution.
There is thus wealth of information available to the consumer which can, many times, be frustrating. Thus it appears that there is great need for meta-data screening of information so that the consumer can find what he wants in the time frame that he would like to spend and world leaders on meta-data searching are working on these issues, but there are still considerable problems. A collection of few interesting web sites is then presented, in order to show what can become available and as a driver for other companies to follow. Of course, the list is not exhaustive, rather very limited.
An analysis then follows on the evolution (or revolution? ) of smart phones and what they can offer to the traveler. Industry is hoping for the new revolution and this, it seems, is about to happen. A similar evolution is expected and already happening with the use of the Web 2. 0 technologies, which enable the traveler to become the participant and not only the passive receiver. It is well understood that these technologies do have as audience and as target group the young generation. Tourism companies should really focus on how these technologies can shape their businesses.
Also government and local authorities should realize all these benefits and tailor-make programs which can support technology implementation by the tourism companies. Training packages should become available so that personnel can become familiar with these technologies. Full exploitation of the huge benefits from Web 2. 0 can be accomplished by infrastructure development, need for education and exposure to global best practice, local co-opetition, focusing on innovation and always with a vision for the future. Several web sites utilizing web 2. 0 technology can be found and some are listed in the main report.
Trends on ICT will allow for more automation, but this does not mean that human intervention will not be needed. Many businesses have realized that personal interaction is vital for online ventures with the technology merely used to speed up the process but not to replace human intervention which is urgently needed. 11 Businesses starting only as on-line tools had to expand to personal customer services to meet client demands. ICT expands tourism opportunities beyond the 3S, like for example cultural tourism, treasure hunting, religious tourism, e-inclusion.
Action in the field of ICT for tourism is targeted at developing new components and distributed architectures for tourism information and communications systems that support users and businesses, by offering value added services and multimedia information on accommodation, events, culture and leisure, together with booking and payment facilities. Challenges are there for promoting also e-Inclusion policy, which promotes the use of ICT to overcome social exclusion, and improve economic performance, employment opportunities, quality of life, social participation and cohesion.
Many researchers have been questioning, though, the capacity of tourism companies to face the challenges of the fast evolving technology in general and of ICT in particular. There is great need for research organizations and tourism industry to come up with the appropriate business models for this new environment. This specifically calls for the businesses to pay more attention to have adequate people that can harness this knowledge within their premises, follow training programs, available by ICT industry and partially supported by government, so that they can fully exploit the benefits that ICT implementation can offer.
Addressing innovation trends for energy technologies, it is discussed that the support industry seeks to respond to the present and future energy needs of tourism companies by investing in research, technology and innovation that create commercial value and achieve the highest standards of environmental performance. Analysis of both actual data and modelling results have demonstrated that Renewable Energy Supply (RES) can effectively meet the power demand for standalone small to medium-scale tourist accommodations, that are most likely to be located in peripheral and environmentally sensitive areas.
Energy efficient technologies and practices available to businesses include motors, boilers and sophisticated energy management and control systems. In the short term, better material and waste recovery technologies, advanced materials, cleaner coal technologies and energy substitution technologies will help keep existing energy supplies affordable and available. renewable energy supply options for small to medium-sized tourist accommodations, optimisation, achieved by further addition of RES to the existing configurations, reduced net present cost (NPC) in the majority of cases, with the added benefit of increased renewable fraction (RF).
Innovative transport alternatives and renewable transportation fuels are key-factors to tourism sector along with the innovative building/hotel technologies since, approximately, 12 50% of the energy used in buildings is devoted to producing an artificial indoor climate through heating, cooling, ventilation, and lighting. Knowledge and costefficient technologies are available to apply “smart building design”, to design, construct and operate buildings that are energy-neutral or that produce more energy than they consume.
A series of case studies with applications of renewable energy technologies, particularly applied to islands in the Mediterranean, where tourism is one of the main industries, are then presented. These include wind energy, photovoltaics, small hydro-power plants. The clever combination of wind-hydro plant is also presented, with the first attempt to be constructed in El Hierro, Canary islands, to be completed in 2011. The focus then is on innovation trends in environmental technologies. Most of tourism destinations rely on natural environment to attract visitors, and in particular the 3S (sea-sun-sand) visitors.
However, research with hotels and travel industry executives shows that travel industry is not fully immersed into environmental technology application programs. A very interesting finding of the studies is that the respondents noted that few hotel guests demand that hotels maintain environmental programs. Interestingly enough, similar findings, although to a smaller number of hotels, were found and reported in the case of Crete, already reported in the Regional Report of Crete, for TOUREG.
Use of cleaner technologies lead to minimization of the volumes and hazards of gaseous, liquid and solid waste, minimization of the risk of accidents involving chemicals and processes, minimization of the consumption of raw materials, water and energy and use of the substitute chemicals and processes less hazardous to human and ecological health. Examples of such cleaner technologies that include tertiary treated sewage use for irrigation, metal, glass and plastic recycling, composting organic solid waste, use of renewable energy sources, smart building design to reduce energy demand for lighting and cooling systems.
By undertaking cleaner technologies and complying with environmental friendly policies, tourism businesses can attract more and “green” customers, reduce production, fixed etc costs, comply with international environmental protocols and national environmental policies, maintain environmental integrity, reduce energy consumption, reduce material usage. A series of best practices on use of environmentally friendly technologies and approaches to tourism industries are then presented, like one planet tourism, with a first attempt to be implemented on large scale in Portugal with Mata de Sesimbra, the Green Hotel project in Madeira. 3 The report then addresses policies and initiatives on the above issues currently operating in Europe and the rest of the world. The stakeholders of tourism in Europe will receive strong support from the Commission, since the Commission has put in place a renewed European tourism policy responding to the challenges of today. The main aim of this policy have been to improve the competitiveness of the European tourism industry and create more and better jobs through the sustainable growth of tourism in Europe and globally.
Based on the above and studies by European researchers, the characteristics of an innovative hotel, can be absolute described as hotel highly integrated in a network of commercial relations (with operators and chains) and with owners in full control of costs and new services. Network relations cut costs and bring stability which can carry the risk and costs of introducing new services. Hotel managers and owners would make innovation decisions concerning the additional services on offer, taking into account that bookings are made through tour operators, that hotels are part of a hotel chain and that the owners of the hotel run the business.
The policy makers should emphasise education and increasing managerial professionalism in the industry. Regarding policies to promote e-business and ICT adoption, measures such as, initiatives to promote networking and cooperation, encouraging the adoption of e-business in micro and small companies, promoting ICT infrastructure and eintegrated business processes and encouraging innovation and research and development in e-tourism, would seem most promising. Measures should also be taken against market concentration, particularly for the online booking business.
Promotion of the Europe brand is being strongly supported using the European wide portal, visiteurope. com. Regarding energy and environment policies and initiatives, the European Commission has already pointed out that ensuring the economic, social and environmental sustainability of European tourism is crucial, both as a contribution to sustainable development in Europe and world-wide and for the viability, continued growth, competitiveness and commercial success of this economically-important sector.
As a result the Commission launched the preparation of a European Agenda 21 for tourism and set up in 2004 the Tourism Sustainability Group (TSG) in order to encourage stakeholder synergies and to provide input into the Agenda 21 process for the sustainability of European tourism. A series of specific initiatives, European and world wide are then described which document intervention of the major stakeholders for innovation promotion in tourism industry, in the three technological areas chosen by TOUREG. These include 14 he European Destinations of Excellence (EDEN), the FutureHotel, the Finish R&D program for Research and Development Programme for Leisure Services, the EUREKA Tourism project and initiative, the 6S Hotel project under EUREKA, the Learning Areas initiative for tourism, the Tourism for Tomorrow Awards, and the projects for energy and environment supported by World Tourism and Travel Council. The above analysis gives all necessary information and ingredients for performing a SWOT analysis for European industry, which is presented in the conclusions of this report.
The second part of this report presents executive summaries of the five Regional reports for tourism in the Regions of the Isles Baleares, Spain, of southwest Oltenia- Mehedinti County, Romania, sout-west Bulgaria, Madeira, Portugal, and Crete, Greece. It presents the analysis on the current state of tourism in each Region, the SWOT analysis prepared by the partners of TOUREG and proposed action plans for making tourism in each Region more competitive. A synthesis of the SWOT analysis was then attempted and presented which combines the strengths, the weaknesses, the opportunities and the threats, that are all common to the five Regions. 5 2. Introduction Tourism is one of the biggest and fastest growing industries in the world. According to the World Tourism Organization (UNWTO), in 2008, international tourist arrivals reached 924 million. By the year 2010 international arrivals worldwide are expected to reach 1 billion. If domestic tourists are added to the above figure, total tourist arrivals can well be over 3 billion. UNWTO's Tourism 2020 Vision forecasts that international arrivals are expected to reach nearly 1. 6 billion by the year 2020. According to the World Travel & Tourism Council (WTTC), tourism and related activities are estimated to generate some 9. % of the world’s Gross Domestic Product (GDP), while the tourism sector is the largest employer, accounting for some 225 million jobs or 10. 7% of the global labour force (WTTC, 2008). The benefits of tourism, mainly economic, have been enormous, especially for developing and poor countries that have limited sources of foreign currency. Nevertheless, with the nonconsiderate development of the tourism industry a lot of negative impacts have arisen, causing environmental and cultural deterioration and requiring concrete sustainable measures and policies to counteract and reverse the unfavorable situation.
The tourism sector in the modern globalized, competitive and fast changing world is exposed to challenges that have to be addressed through a series of measures taken both by the public sector and the individual enterprises. The recent all pervasive economic crisis has spread rapidly all over the world and has adversely affected tourism; more specifically it has resulted in a decline of the tourist flows – both international and domestic–, of employment and tourist spending. The negative economic impacts noted above are more serious in countries and regions that are more dependent on incoming tourism.
The regions that are included in the present report are among the most touristic developed in Europe. To effectively address the negative effects of the economic depression on the tourism sector in each region of the present report, an objective evaluation of their strengths, weaknesses, opportunities and threats has been contacted by each participating institution. This document contains summaries of the regional tourism reports prepared by the participating institutions. The main part of the report analyses the current status of the tourism sector.
More specifically, after a brief overview of the historic evolution of travel and tourism from the beginning, in ancient times, till today, global trends in tourism supply and 16 demand are described; tourism flows and concentrations both geographical and seasonal are given the necessary emphasis. The advances in Information and Communication Technologies (ICT), Energy and Environmental Technological and Innovation trends are examined in detail with cases studies of their applications to the tourism industry. Thessaloniki, October 2009 7 3. A brief history of tourism The concept of travel and tourism is as old as civilisation itself. An overview of tourism’s historical development is required in order to fully appreciate today’s modern tourism environment and to understand the challenges of the globalized economy. Most historians of tourism have tended to focus on Europe, from the Greeks and Romans, to the railway and Thomas Cook in the UK. However, it is important to recognise that tourism has existed in other regions of the World for centuries.
The history of tourism cannot be easily traced; back in the ancient years, as ancient world empires grew in Africa, Asia and the Middle East, the infrastructure necessary for travel such as land routes and water ways was created and vehicles and other means for travel were developed. During the Egyptian dynasties, travel for both business and pleasure began to flourish, and hospitality centres were built along major routes and in the cities to accommodate travellers travelling between central government posts and outlying territories (Coltman, 1989).
At the height of the Assyrian empire, the means of travel were improved, the roads were improved, and markers were established to indicate distances and directions (Gee et al, 1997). Later, the Persians made further improvement to the road systems and developed four-wheeled carriages for transportation. It is often thought that the beginnings of tourism date back to ancient Greece and Rome because we have evidence of tourism, from these eras, in terms of travel and tourism writing, for example.
The earliest recorded tourism in Greece tended to be specialist in nature and related to religious practice; people visited religious festivals and consulted oracles (Swarbrooke and Horner, 1999). They also attended sporting events like the Olympic Games which began in BC 776, but even these had a religious significance. The early Greeks advanced tourism developments in two particular areas. First, through the development of a coin currency, replacing the need for travellers to carry goods to barter at their final destination for other goods and services.
Secondly, the Greek language spread throughout the Mediterranean area, making it easier to communicate as one travelled. At the height of the Roman Empire, the ruling patrician class enjoyed their leisure during the periods of relative peace. Like the Greeks before them, they observed their own athletic and religious events and travelled to these cities. Sightseeing was also popular with the wealthy Romans; their most popular choice of 18 tourism destination was Greece! Romans also toured Egypt to see the Sphinx and the Pyramids.
Alexandria was a cosmopolitan oasis for Roman aristocracy, since many nationalities were represented there including Egyptians, Greeks, Jews, Ethiopians, Indians, and Syrians. In addition, the Romans developed extensively the concept of spa therapy and bequeathed it to the rest of the world. Until the 17th century, spa therapy was combined with relaxation, entertainment and the development of pleasant social activities. However, the spa therapy, although a form of tourism, had very few conceptual and practical similarities with what denote today the words holidays and tourism.
Thomas Cook has been the so called “father of the tourist trade”, since, on July 5 th 1841, he arranged to take a group of about 500 members of his local “Temperance Society” from Leicester London Road railway station to a rally in Loughborough, eleven miles away, having arranged with the rail company to charge one shilling per person that included rail tickets and food for this train journey. When industrialization across Europe gave rise to an affluent middle class with an increasing amount of free time, tourism began to take shape as an international industry.
However, for the most part of the 19th century it has been expensive and limited to a small number of destinations. When in the 1960’s a growing number of people had disposable incomes and the desire for “something new”, reasonably priced commercial aircrafts airplanes made international travel easier; mass tourism had arrived. 4. The economic evolution of tourism 4. 1 The Fordist concept Up until the mid-70s, in Western Europe and North America, the dominant model of economic and social organisation was one of more or less distinct eatures: that which some analysts call “fordist capitalism” (Pelagidis, 1998). The spatial expression of the term is associated with the concentrative tendencies of the great industrial units in the urban centres of the capitalistically developed countries 3 . The labour framework in question relies on a narrow spectrum of specialisation, the standardisation of the object of labour, allowing the production of 3 It is the so-called urbanisation phase, which lasts from the time of the industrial revolution until the first two post-war decades.
The driving forces of population and activity concentration in the big cities are the external economies of scale that the industry appreciates as a dominant form of economic activity (Petrakos, 1998). 19 goods and services in great quantities and lines, which will nevertheless be characterised by small variety and great standardisation. Hence, during the period of the fordism model of development, a new social prototype was created and its main components were mass consumption of standardised products, supply of standardised goods and services, reduction of unemployment, as well as the labour model of full-time/ typical employment.
Not being an exception, tourism in the second half of the 20th century developed within the context of Fordism, producing standardised products- mainly holiday packages- placing no emphasis on quality, essentially establishing the model of “mass production” that operated at the rate of the “conveyor belts”, meaning the production process was strictly specified at both levels of travel package creation and service supply. The aforementioned “organisation” elements of “fordist development” started fading or even reversing in the last quarter of the 20th century, under pressure from the following important factors.
Endogenous factors: • The inflexibility and inability of the general, and, consequently, of the tourism system –a natural inclination towards the uniform and standardised market– to meet the requirements of unstable demand, signified a break with the standardised mass production. • The transformation of the technological base that has as a direct consequence the decline of the model whose major parameter for the viability and the dynamism of a business is “size”.
Extraneous factors: • The internationalisation of the economic system which intensified competition while at the same time reduced the potential national governments have to influence their economies with the usual economic instruments. • • The introduction of new technologies and the parallel support of innovation in small and medium businesses. The shift in the pattern of consumerist behaviour. The search for distinctiveness and uniqueness conflicted with the standardisation and the production of identical goods and services. The burdening of the social, environmental and economic resources mostly because of the intensity of production. 20 4. 2 Post- Fordism Under the influence of the above-mentioned endogenous and extraneous organisational factors of fordist development, the trend for developing a new model was established, a model whose theoretical basis is the questioning of the mass production dynamic and the effort to set innovative business principles for the establishment of a new wave of economic welfare.
This model was named postfordism and was heavily promoted during the 1980’s by political economy scientists in their effort to explain the dynamics of the reformation of production and consumption. In the vein of cooperation and flexibility of the specialisation of the already globalised small and medium businesses, which tend to be of no great size, but multi-divided and flexible, Schumpeter (1934, 1939) highlights through his theory of “creative destruction” the importance of technology in the facilitation of the transition to the “new age”, thus shaping the new infrastructures.
For this information technology and telecommunications are of great significance, since they are sectors that created a chain of consequences (Urry, 1990), making the tourist product more flexible through customisation and complete specialisation. In the same way, the transition to the post-fordist era of tourist development goes together with the transition from mass tourism to the development of non-mass forms of tourist activity (Green and Chalip, 998) on the one hand and to the creation of a new type of independent consumer on the other hand (Free and Independent Travellers-FITs) (see Lew 1998). This tendency of tourists to view themselves as excursionists-travellers, led to the emergence of specialised tourist agencies that promote a type of mild tourism which encourages a greater accountability and sensitivity towards the needs of local reception communities on the tourists’ part (Kelly, 1997).
Modern tourism is no longer a heavy industry, but rather a small industry of experiences and impressions, since it now follows the logic according to which the phenomenon transcends the status of simple commodity (which includes goods and services) and becomes a complex product (always commercial) whose main peak component is personalised experience (see Christou et. al 2008, Skayannis and Stamboulis, 2000).
The above show that the determinative factors in tourism, whether we are talking about the product or the producers, the consumer or even the location, undergo significant transformations. Meethan (1998) notes that in the age of “metatourism”, the traditional tourist destinations should either be restructured or face decline, according to Butler’s (1980) concept of life cycle evolution of a tourist area. 21
Naturally, tourism, as a multidimensional phenomenon, affects and is affected in its turn by the environment, since, in the context of the product’s massiveness, additional population numbers live for specific periods of time in places where the natural wealth and the technical facilities with respect to infrastructure are not enough to support the extra burden, thus violating the principles of viability as defined by a number of researchers, such as Coccosis, Farsari, Spilanis and others.
The question, posed by the researchers themselves, is how the development of tourism may be planned so that viability is achieved, meaning in a way that the socio-cultural and natural environment is affected as little as possible and has the ability to regenerate itself. These reasons make the planning a far more important and complex issue than it has been until now. The planning of tourism is based on broader infrastructures and it should be a constant, flexible and partial, step by step, process.
The partial development of tourism, “stresses the gradual application of recommendations (instructions) for the planning, the constant observation of tourist development and the flexibility in the adjustment of the planning” (Timothy, 1998: 72). 5. Destination’s stakeholders and their directions Since the necessity of new infrastructures has been established, we also have to determine their operational and implementation framework at a specific destination.
For this reason, it would be wise to specify: a) the role and the expectations of the tourism producers and b) the essence and status of the destination’s administration and promotion organisation. Stakeholders are defined as groups or individuals that have specific interests in an organisation’s actions and the ability to affect it. The World Tourism Organization identifies as stakeholders the private citizens, the local community and the government.
According to Spilanis (2000), the modern international structure of the tourist phenomenon has created three main groups of stakeholders who are going in different directions, but don’t necessarily have conflicting interests. The first and primary group is the government. The organised central administration participates in the formation of the phenomenon even locally, lending stability, financing infrastructure works, supporting investing etc. having as a final goal the inflow of incomings through taxation and the attainment of stability, affluence and social peace. The second group is the one that expresses itself mainly through the local self-government whose main concern is the improvement-preservation of the environmental appeal of the destination, aiming not only at the improvement of the citizens’ daily lives, but, also, at the attraction of investors, and the increase of the number of job positions within the narrow limits of 22 he destination, securing social peace, affluence, incomings and, lastly, the destination’s viability. The third group of stakeholders is the private enterprise that aims to increase the profits and for which the social and environmental viability may be second priority. The activity categories that form the relations of the tourism commissions can be placed in the following five categories: • the economic network and its viability, • the qualitative characteristics of the local population, • the natural and man-made nvironment, • the infrastructure system, which includes the infrastructures that affect a district’s appeal and function both economically (for the attraction of production units, such as transportation, communication and energy infrastructures) and socially (for example, health, educational, cultural and recreational infrastructures), • the “developmental climate” or the “ambient conditions”, which includes all the elements that affect the district’s developmental dynamic, such as developmental institutions, the cultural level, enterprise, the level of technology and innovations and the inclination to integrate into the production process, the beliefs, the expectations and the intensions of the local manpower concerning the content of the developmental conditions and the quality of life etc. From the above, it is obvious that in all the stages of design and materialisation of the developmental plan, within the framework of a destination, there is a great need for quantitative and qualitative information. This information concerns the past, so that the current condition of the destination can be properly analysed. It also concerns the present, in order to be aware of the existent state in the immediate competitive environment and by extension to be able to place the destination in this environment.
Finally it concerns the future, so that there is on the one hand a correct evaluation of the results of the strategies and the necessary correctional interventions and on the other hand, the possibility of predicting oncoming changes. The latter helps the destination to be able to foresee oncoming changes and react sooner than the competitors, securing a strategic advantage. This means that the gathering and processing of information in dynamic form (web 2. 0, semantic web etc. ) is necessary, concerning both the extraneous and endogenous factors that affect the district’s course. It has to be stressed that, in 23 contrast to the endogenous factors, a destination can neither ignore nor avoid the extraneous ones. 6. The global tourism and hospitality industry
Tourism has become, nowadays, one of the largest industries in the world. In 1984, international tourist arrivals were above 300 million and the total value of the global tourism industry was above $100 billion for first time. Twenty two years later, in 2006, the sector generated 10. 3 percent of World Gross Domestic Product (GDP), providing 234 million jobs, or 8. 2 percent of total world employment (UNWTO 2007). According to the World Travel and Tourism Council (WTTC 2009) in 2008 the gross product of international tourism reached $7. 5 trillion, the capital investment for tourism was $682 billion and tax revenues were close to $503 billion.
After four years of growth averaging at 3. 6% pa, Tourism and Travel (T) Economy GDP growth slowed to just 1. 0% in 2008, its weakest performance since the recessionary period. Two difficult years are now in prospect, with T Economy GDP likely to contract by 3. 3% in 2009 and to expand by only 0. 3% in 2010. But, looking beyond the current crisis, Travel & Tourism is expected to resume its leading, dynamic role in global growth (WTTC 2009). Table 1: W. T. O Tourism Vision 2020 (international arrivals) Base Year 1995 2010 2020 (Million) World Africa Americas East & Pacific Europe Middle East South Asia 4 11 19 0. 7 1. 2 6. 2 336 14 527 36 717 69 59. 8 2. 2 45. 4. 4 3. 1 6. 7 Asia the 565 20 110 81 1006 47 190 195 1561 77 282 397 1995 100 3. 6 19. 3 14. 4 2020 100 5. 0 18. 1 25. 4 Forecasts Market Share % Average annual growth rate (%) 1995 - 2020 4. 1 5. 5 3. 8 6. 5 Source: WTO 2001a, 2001b 24 The World Tourism Organisation (2009) has estimated an average annual increase in global tourism of 4. 1% during the 00s; from 2000 - 2020 the average annual increase was estimated between 3. 1 – 6. 5%, while estimates for the period 2010 - 2020 show an average increase of 5. 0% p. a. (Table 1). According to these estimates, the number of international tourists will double in less than twenty years from now.
The total tourist arrivals by region shows that by 2020 the top three receiving regions will be Europe (717 million tourists), East Asia and the Pacific (397 million) and the Americas (282 million), followed by Africa, the Middle East and South Asia (Figure 1). The vast majority of tourist movement (83. 2% of all international tourist arrivals in 2008) takes place in Europe and North America (WTO 2008). The countries that generate tourists, known as “generating countries”, must be distinguished from those that receive tourism, known as “destination countries”. The leading tourism generating countries include USA, Britain, Germany, France, Canada and Japan, which contribute almost half of the global tourism revenue (WTO, 2008).
In Europe, the main generating countries are those in the North of the continent while the main destination countries are in Southern Europe at the Mediterranean basin (Greece, Spain, Portugal, Italy, and France). Figure 1: W. T. O Tourism Vision 2020 (international arrivals) Source: WTO 2001a, 2001b The role played by tourism in the economic development of a nation is very important (Figure 2). Many countries turn to tourism as a means of improving their balance of payments, attracting foreign investment and solving their unemployment 25 problems. In addition to direct income and employment generated by tourism, there is also the tourism income multiplier effect (Fletcher and Archer, 1991).
This means that in order to measure the total economic impact of tourism on a country one must account not only for the direct receivers of the tourists’ money but also of the indirect receivers: farmers and factories who supply food and drinks to hotels and restaurants; suppliers and manufacturers of industrial equipment (i. e. furniture, kitchen equipment, etc. ); retail stores, banks, and the many other organisations or individuals who benefit by the development of tourism. Particular attention must be paid to the fact that tourism is a labour intensive industry requiring considerably large numbers of capable, well-trained employees. Figure 2 : Tourism Vision 2020 (international arrivals)
Source: WTO (2008) As the Chinese Academy of International Trade and Economic Cooperation (2008) points out, the increase in commercial services exports in 2007 was markedly faster than in the preceding year and somewhat faster than that of merchandise trade. In the last 4 years, commercial services trade growth has been lower than merchandise trade. The acceleration in services exports could be observed in all major regions and in all three services categories. Much of this acceleration is due to exchange rate movements and in some cases also to higher costs of transportation fuels. It can be assumed that exchange rate changes played a stronger role in the dollar value change of services trade than in merchandise trade, as Europe accounts for a larger share of services than merchandise exports, and Euro appreciated apparently to dollar in 2007. 26
Table 2: World exports of commercial services trade by major category, 2000-07 Value ($ bn) 2007 Commercial services Transport Travel Other commercial services Source: Chinese Academy of International Trade and Economic Cooperation 2008 from WTO Secretariat. Annual percentage change (%) 2000-07 12 11 9 14 2005 12 13 7 14 2006 12 9 9 15 2007 18 18 14 19 3260 742 862 1653 Transportation, travel and “other commercial services” (including communication services, construction services, insurance, financial services, computer and information services, exclusive rights to use and licensing, consulting, accounting, legal and advertising services, recreational, cultural and sporting services, etc) are the three most important broad commercial services categories (Table 2). In 2007, other commercial services expanded by 19% to $1. 65 trillion, again faster than transportation and travel.
Higher fuels cost contributed to the relatively sharp rise of 18% in the dollar value of transportation services, and travel services export rose by 14%. Between 2000 and 2007, other commercial services achieved an average annual growth rate of 14%, higher than transport services of 11% and travel services of 9%. Other commercial services expanded more than transportation and travel, mainly owing to world merchandise trade increase and much higher cost of transportation. The differences of growth rate lead to a change of commercial services exports overall structure. The proportion of transport, travel and other commercial services in the total exports of commercial services is 22. 8%, 26. 5% and 50. % respectively (Chinese Academy of International Trade and Economic Cooperation, 2008). According to the World Travel and Tourism Council (2009): a) The contribution of Travel & Tourism to Gross Domestic Product (GDP) is expected to rise from 9. 4% (US$5,474 bn) in 2009 to 9. 5% (US$10,478 bn) by 2019, b) The 27 contribution of the Travel & Tourism economy to total employment is expected to rise from 219,810,000 jobs in 2009, 7. 6% of total employment, or 1 in every 13. 1 jobs to 275,688,000 jobs, 8. 4% of total employment or 1 in every 11. 8 jobs by 2019, c) real GDP growth for the Travel & Tourism economy is expected to be -3. 5% in 2009, down from 1. 0% in 2008, but to average 4. % per annum over the coming 10 years and d) export earnings from international visitors and tourism goods are expected to generate 10. 9% of total exports (US$1,980 bn) in 2009, growing (in nominal terms) to US$4,132 bn (9. 8% of the total) in 2019. According to WTTC’S TSA research covering 176 countries world wide 4 , the USA continues to maintain pole position as the largest travel & tourism economy in the world, with a total demand of more than US$1,747. 5 billion forecast for 2008, rising to US$3,078. 3 billion in 2018 (Table 3). China has climbed two places into second position, having overtaken Japan and Germany. Travel & Tourism employment is lead by China (Table 4).
Moreover, China is forecast to grow its Travel & Tourism Demand four-fold by 2018, to US$2,465 billion, thanks to an annual growth rate averaging 8. 9%, although it will still lag behind the USA in absolute volume (Table 5). Over the next ten years, the picture will change somewhat as emerging tourism markets start to reap greater benefits from their investment in Travel & Tourism development. While the USA, China, Japan and Germany will retain their current top four slots in terms of total Travel & Tourism Demand (in absolute terms), India will be the world’s number one in terms of annual growth in Travel & Tourism Demand between 2008 and 2018, averaging 9. % per annum – ahead of China, Libya, Vietnam and Montenegro. Table 3 Countries expected to generate the largest volume of Travel & Tourism Demand (TTD) in 2008 TTD, 2008 (US$ bn) 1,747. 5 592. 0 514. 3 505. 7 418. 8 403. 7 338. 2 302. 9 231. 4 157. 6 1 2 3 4 5 6 7 8 9 10 USA China Japan Germany France UK Spain Italy Canada Mexico 4 World Travel and Tourism Council (WTTC), 2008. Progress and priorities 2008/09. 28 Table 4. Countries expected to generate largest amount (in absolute terms) of Travel & Tourism Economy Employment T Economy Employment, 2008 (‘000 jobs) 74,498 30,491 14,933 6,833 6,633 5,936 5,500 4,891 4,126 3,911 1 2 3 4 5 6 7 8 9 10
China India USA Japan Mexico Indonesia Brazil Vietnam Russia Thailand Table 5. Countries expected to grow their Travel & Tourism Demand most rapidly between 2008 and 2018 T Demand, 2008-18 (% annualised real growth) 9. 4 8. 9 8. 1 8. 1 7. 4 7. 1 7. 1 6. 9 6. 9 6. 8 1 2 3 4 5 6 7 8 9 India China Libya Vietnam Montenegro Romania Macau Namibia Croatia Czech 10 Republic The hospitality industry forms a major part of the tourism industry. The hospitality industry consists of a number of major sub-sectors and ancillary activities: • Accommodation: Hotels and motels; self-catering accommodation; health farms; camping sites and caravan parks; holiday camps; timeshare; and, ferries/cruise liners. Catering: Restaurants; cafes; bars and clubs; fast food; speciality and outdoor activities; contract catering; and, transport catering (airports, airlines, trains, etc. ). • Entertainment • Attractions (i. e. theme parks). • Business hospitality: conferences; conventions; and, exhibitions. 29 From all the above it is fair to suggest that hospitality is mainly concerned with accommodation and catering services including related activities. The hospitality industry has been expanding rapidly during the last four decades. Since the Second World War the industry started to become truly internationalized with the development of global hotel and catering chains.
In 1995, there were approximately 10. 5 million rooms in hotels and other various accommodation establishments throughout the world; 50% of these were located in Europe and North America (WTO, 1996). An increasingly large number of hotels are owned by large chains. Experts in the industry believe that soon the hos
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