Multi-sided ecosystems These customer-facing branded platforms collect and share data to improve the customer experience. Garcia Sanchez, J. In a taxonomy of sectors by digital intensity (Table 2.1), accommodation and food service activities is ranked low for digital intensity, while arts, entertainment and recreation activities are ranked medium-high based on seven different metrics (OECD, 2019c). One issue for smaller tourism businesses is gaining access to this data, as the larger digital platforms can act as gatekeepers to large amounts of data collected about individual businesses, their customers and market transaction. Innovative business models are a lever to optimise the benefits of digital transformation. The new system will make it possible to collect fast and reliable statistical data relating to overnight stays and source markets. Program Guidelines. The shift has been from traditional product-facing, profit-oriented approaches of doing business towards user-facing digital models that produce and deliver shared value. The Government is committed to supporting and promoting the digital transformation of the tourism sector, making use of new technology to enhance the promotion of the country, providing tourists with better information to help informed decisions and improve their experience while visiting. Understand the data revolution that is taking place, and how data and data flows affect individuals, the economy and society more broadly, and. An empirical assessment. In Portugal, for example, Tourism 4.0 aims to build a digital ecosystem to support start-ups, promote entrepreneurship and foster innovation in tourism. While many of the challenges and opportunities for tourism SMEs are similar as those for SMEs more generally, tourism is a unique proposition for several reasons. UNCTAD (2018), Technology and Innovation Report: Harnessing Frontier Technologies for Sustainable Development. Automation, artificial intelligences and big data analytics facilitate the interoperability of booking systems but pre-existing partnerships can also lock in customer choices to preferred partners and lock out SMEs offering alternative products and services. beds and cars) and global operations, many tech-driven digital native firms have been able to make use of gaps in planning, safety and labour laws and other regulations. It is changing the way work is organised and services delivered, and also presents opportunities to take advantage of digital advancements to handle transactions, capture and process information and data on tourism supply and demand, and improve and connect operations along tourism value chains and ecosystems. This chapter examines the impact of digitalisation on tourism, with a particular focus on SMEs. While visitor spend was 41% lower than in 2019, the effect on employment was more subdued. From 2019 onwards, Institutes of Vocational Training will comprise the specialty of Management and Tourism Economy Executive, training students to the use of all essential travel market digital applications. This suggests that tourism SMEs that receive support to refine and innovate business strategies may be in a better position to raise capital. OECD (2019f) data show that on average 77% of the accommodation and food and beverage service businesses in OECD countries have a website or homepage and 70% use social media. Meanwhile, total domestic gasoline stocks decreased by 2.5 million barrels to 219.5 million barrels. The implications of transformation for tourism SMEs are significant because digitalisation moves the production of visitor experiences from linear value chains to value ecosystems (Kelly, 2015; WEF, 2019). Policy initiatives can be targeted towards the creation of technology-enabling and business innovation environments and to encourage widespread participation in the co-creation of value. For example, in the UK, the Explorers Road tourist route north of London has been developed to engage with local SMEs and build their digital visibility and capacity along the way (Box2.6). Lockett, N., & Brown, D. H. (2006). However, by definition, existing businesses will also have to undertake digital transformation, and to do so they will need support to ensure they have the opportunity, and the tools necessary to reach their digital potential. Table2.3 summarises the differences between these business models. Champions that are trusted intermediaries in the sector that have demonstrated success with digital tools, would have credibility, knowledge, and would likely increase policy effectiveness. Customers greater choice, seamless experiences, increased satisfaction, SMEs - management efficiencies and timeliness, increased cost efficiencies. Interim Report. Provo Beach's indoor wave machine, Flowrider, will make you think again. 8, 2019. TouristWise) in popular tourism areas and along popular tourist routes will only become more important as destinations seek provide a seamless journey and enhance the visitor experience in an increasingly competitive marketplace. This suggests that there is opportunity to position incubators, accelerators and other policy supports to develop tourism business models and value ecosystems that not only achieve tech-centric objectives but also benefit tourism SMEs, destinations, and the sector. The digital Roadmap is built around 4 pillars to accelerate the digitalisation of the Finnish tourism sector: Data driven collaboration and management, utilising platform economy and developing multi-channel online distribution, promoting responsibility through digital means and scaling up from smaller regional digital pilots to national way of running the tourism business. Imperial College London. Traditional scientific management approaches, that see strategy and business planning as separate to the conduct of business operations, are increasingly outdated. Measures that help to innovate business models and management practices, and transform traditional work practices will complement other policy initiatives. They might disrupt tourism markets and traditional business models but may not contribute to wider tourism development goals such as enhancing visitor experiences, destination sustainability, and community wellbeing. In Switzerland, based on an in-depth analysis of the implications of digitalisation for tourism destinations, highlighted the impact on destination marketing among other things, and this is the focus of the Swiss Innotour project Tourist Office 3.0 is an intra-industry support lab among tourist offices as well as a linkage with external service providers in the digital area. Digital businesses such as online travel agents and accommodation platforms, have transformed tourism by connecting tourism products and services with customers anywhere in the world in real time, as well as significantly increasing market visibility for tourism SMEs. Historical behaviors included increased public transportation . While the Tourism Big Data Platform is in use, it accumulates and shares the data gathered about the tourist with local governments and the private sector to better inform tourism stakeholders. they outsource to the apartment owner who wants to share their accommodation). virtual/augmented reality, Internet-of-Things), and technologies that assist, understand and connect with markets (e.g. The shortened format is a good way to encourage upskilling while taking into account the limited time and resources of tourism SMEs. For example, accommodation-sharing platforms can use technologies to efficiently scale at marginal cost and gain a market advantage to quickly become dominant players in the accommodation sector. PATA and Oxford Economics, Bangkok. Final Report. Understanding how value is co-created and shared between multiple collaborating stakeholders is important in unlocking the potential of the digital economy. Digital disruption: What do governments need to do? Research into business ecosystems reveals companies pursue digitalisation along two dimensions: i) to know more about their customers and market more effectively; and ii) to use technology to operate more effectively in the digital ecosystem or along value chains. City A and City B are 14 miles apart. In demand-driven models, users create diverse kinds of value for other users through a range of mechanisms (e.g. In recognition of the transformational economic and social power of smart technologies, countries such as Croatia, Korea, Portugal and Spain have introduced programmes to support the development of smart tourism destinations (Box2.5). Jurni is an industry-led alliance between the public and private sector with the aim of transforming the tourism sector in South Africa. Investment supports are also available. tourism networks) to encourage uptake, catalyse tourism business ecosystems, and promote a digital mindset. An informative visitor portal that allows travellers to discover South Africas tourism products and services. These developments are expected to generate positive benefits for businesses, including generating higher value added, improved business activity and cost mitigation through predictive analytics. Geneva. Concerns in the sector are raised as current supports to SMEs are often focussed on tech service providers. Tourism value chains have transformed into global value ecosystems as consumers can now have direct access to the businesses in charge of delivering the final tourism good, service or experience (Box 2.1). "Digital concierges" are technologies that can have an impact on small hotels as they reduce human resource needs. The uptake of digital technologies at the operational level and the adoption of digital business strategies have been uneven, and the gap between innovative digital companies and traditional tourism SMEs with low levels of digitalisation is growing (WEF, 2017). For example, TourismX was launched in Denmark in 2018, with the purpose of strengthening innovation in Danish tourism enterprises. Brynjolfsson, Erik & Hitt, Lorin & Kim, Heekyung. With the rise in sustainable tourism and an increased number of initiatives for being environmentally friendly, tourists and stakeholders alike are now recognising the importance of environmental management in the tourism industry. The same research found that tourism SMEs lagged behind large enterprises. Note: Accommodation and Food and beverage service activities as a proxy for tourism sector. One potential approach to support SMEs may be in the form of a Chief Tourism Entrepreneur to champion the digital transformation. The Explorers Road web portal promotes all associated destinations and businesses and provides a means for independent travellers to contact operators directly (www.theexplorersroad.com). data analytics, cloud computing, and artificial intelligence) (OECD, 2017c) (Box2.3). Yet, minimal barriers to entry and low marginal costs of participating in the digital economy mean that tourism SMEs are able to participate and take advantage of innovation occurring at the ecosystem level (European Commission, 2017; OECD, 2017a). Walks a redesigned concept of how tour guides meet clients and deliver services. The initiative aims to build a digital mindset and encourage all tourism businesses to go on a digital journey. http://reports.weforum.org/digital-transformation/wp-content/blogs.dir/94/mp/files/pages/files/wef-dti-aviation-travel-and-tourism-white-paper.pdf. Digitalisation has expanded the number of stakeholders and the diverse kinds of value that can be co-created in tourism in digitally-mediated global networks. The objectives of such incubators, labs and accelerators should be carefully articulated to reflect needs on the ground. While in 2018, the European Commission supported the first European network of incubators in tourism. TouristWise a tourism app with scalable properties that can be used by tourism organisations to develop, manage and grow visitor experiences, enhance engagement through AR, gamification, language translation, promotion and ticket sales. Nordic countries for example, exhibited higher uptake of digital technologies than those in eastern and southern Europe. Indian tourism industry contributes around 7.5 per cent towards employment. Augmented reality systems show virtual objects in the real world. To get on track with the NZE Scenario, emissions must fall by an average of 3% annually through to 2030. International inbound travelers spent close to $16.8 billion on travel to, and tourism-related activities within, the U.S. in March 2023 a 49% year-over-year increase. Destinations, businesses and the wider tourism sector will need to fully embrace these new technologies to remain competitive, and to take advantage of the innovation, productivity and value creation potential. Understanding digital uptake by tourism SMEs is particularly relevant as around 85% of those enterprises with a major role in the delivery of tourism services in OECD countries are SMEs (e.g. Utah Business is Utah's premier business magazine covering tech news, the creator economy, crypto news, Silicon Slopes, and more. New business models, digital devices, content generated by multiple users, big data and digital commerce all work to create and share new value, to expand and reach global markets, and to create seamless visitor journeys and experiences. Rachinger; M., Router, R., Mller, C., Vorraber, W & Schirgi, E. (2018). OECD (2019a), Enabling SMEs to benefit from digitalisation: Scoping Paper. Tourism SMEs may lack capital reserves, have difficulty qualifying for traditional loans or credit, or perceive the investment too risky. European Union: Following EU wide competitions, two European Capitals of Smart Tourism were selected for 2019 (Helsinki and Lyon) and 2020 (Gothenburg and Malaga). Luxury hotels, business travel and conference demand have been slowest to recover due to the lack of international tourists. Value chains are vertical linkages in the production-consumption process that describe how private sector firms in collaboration with government and civil society receive or access resources as inputs, add value through various processes (e.g. While the digital transformation progressively touches all sectors in the economy, it does so with differing speeds and extents. Examples include Airbnb Handsfree, key concierge services and equipment rentals. As a result of their capacity to scale up quickly, the absence of proprietary physical infrastructure (e.g. Utah's return-to-work programs tap into homegrown talent to address workforce needs. The programme brings together early-stage ventures and project teams from the tourism industry to address productivity, cultural, environmental and social challenges for the sector, and helps to break down the silos between digital companies and tourism SMEs, thus assisting the digital transformation processes. UNWTO (World Tourism Organization) (2019a), The Future of Work and Skills Development in Tourism Policy Paper, UNWTO, Madrid, DOI: https://doi.org/10.18111/9789284421213. Governments have an important role in shaping the conditions for the digital transformation of tourism SMEs, as well as supporting these businesses to adopt and adapt to digitally-enhanced business models and integrate into digital value ecosystems. Data analytics and algorithms can work to favour certain suppliers, customising and bundling products and prompt customer engagement before, during and after travel. Travel agencies, tour operators, destination management organisations and other traditional tourism businesses often work a dual model by maintaining their own internet webpage and social media marketing, while simultaneously offering their products and services on global platforms. Month-on-month jet fuel sales fell 6.7% when compared with 323,500 tonnes in June 1-15, 2023. The UNWTO (2019b) examined the challenges and complexity associated with enforcing existing rules and regulations in a review of new business models in the accommodation sector. Or consider purchasing the publication. OECD Ministerial Conference on SMEs. This is illustrated in Table2.2. The Ministry of the Economy, as well as Luxembourg for Tourism and the regional tourist offices, analyse ways of digitalising their services on an ongoing basis, including: Developing a more efficient digitalised system for registering tourists in accommodation establishments. Cater to multiple users Multi-sided companies deliver value for two or more user groups and have been shown to perform better than businesses based on binary producer consumer relationships. Due to the information-intensive nature of tourism services, the breadth of information available on the internet, and ease of booking, tourism outperforms other sectors when it comes to the share of businesses making online sales in the 28 OECD countries for which data is available, with the exception of Canada, Finland and the United Kingdom (Figure2.1). Previous OECD work on enabling technologies shaping the future of tourism highlighted the need to develop a better understanding of the challenges and opportunities arising from these technological advancements to inform the development of appropriate policy responses (OECD, 2018a; OECD, 2019a). mobile technologies/cloud computing, automation and advanced robotics, blockchain, data analytics, cloud computing), to technologies that produce innovative tourism products, services and experiences (e.g. 15th February, 2023 The environmental impacts of tourism have gained increasing attention in recent years. New York. personal paper-based communication and inventory) which is difficult to scale (McKinsey, 2014). Digital native firms are customer-facing businesses, often delivering value to two or more customer groups (i.e. tourism, the act and process of spending time away from home in pursuit of recreation, relaxation, and pleasure, while making use of the commercial provision of services. Economics Department working papers No.1476. Changing privacy requirements on data protection across the globe can complicate data collection, analytics and storage while private decision makers face competing priorities between capital investment in technology and operational expenditure. Policy measures might include: Support for hands-on innovation and capacity development through travel-tech incubators, accelerators, mentoring opportunities and other non-tech initiatives (e.g. Student Trips, Family Trips, and Group Trips Generate the Demand for Agro-rural Tourism. Domestic business travel increased 1.1% from 2018 to 464 million person . Cloud technologies allow SMEs to manage their business from anywhere high speed internet is available. Financial incentives are offered by the Ministry of Economic Development and Technology to support the creation of digital innovation hubs, e-commerce supports for companies entering new markets and public supports for the digital transformation of businesses. The National Tourism Visitor Information System has been rebranded and transformed into Jurni, which is an online platform connecting travellers and travel experiences across the country. Capacity building initiatives such as support for business mentoring, experimentation through living labs, workshops and online courses provide an opportunity to experiment with these new kinds of value creation and capture. Research shows that only 11% of small firms perform big data analysis, compared to 33% of large firms, and similarly on average, 56% of large businesses purchased cloud-computing services compared to 27% of small businesses (OECD, 2019b). https://unctad.org/en/PublicationsLibrary/tir2018overview_en.pdf. Global companies such as Amadeus have programmes to support SMEs to digitalise (e.g. In this respect, the Ministry of Tourism of Greece has accordingly adapted tourism education provided by its institutions. International Journal of Hospitality Management 67 (2017) 163-173.