Study on the competitiveness of the tourism industry within the EU International conference Tourism Industry – Employment and Labour Market Challenges Prague, 10 June 2009

2 Aim of the study Asses the ability of EU tourism enterprises to achieve sustained success versus non-EU competitors  1. Analysing the competitive performance of the industry and how production factors and dynamics of the sector influence the competitive performance of the industry 2. Screening of the framework conditions including regulatory and other framework conditions.  Conclusions on competitive position of Tourism Industry and main challenges in order to improve competitiveness

3 Scope of the study General description of the tourism industry and general description of trends and developments (economic importance, location of key industry clusters, growth markets, etc.) → The tourism industry as a whole In depth analysis of productivity and profitability, regulatory and other constraints and a strategic outlook → Focus on “accommodation” and “tour operators and travel agents”

4 9 key challenges Fragmented industry - mainly concentrated in old Europe Industry dominated by micro enterprises Strong seasonal nature Difficulties in attracting and keeping personnel Low labour productivity Strong focus on intra-European and outbound tourism Lack of innovation to provide answers to different challenges Active involvement of public sector, but what is its exact role? Access to finance, especially in times of crisis

5 Fragmented industry Fragmented industry with a very divers range of companies, mainly concentrated in ‘Old Europe’ Different sub-sectors Hotels, airline companies, travel agents, tourist boards,... Difference in size of the companies SME versus bigger players Differences between Member States New Member States versus Old Member States The business reality and problems are not the same across the industry, within any one sub sector or between the Member States.

6 Dominance of micro enterprises 90% of the companies employ < 10 persons → Micro-enterprises form the backbone of the industry. Many micro-enterprises are runned by ‘selfmade’ (wo)men Lack of capitalising on opportunities Problem of ensuring the continuation + transfer of knowledge Major challenge to reach these firms and improve their access to support systems, guidance and advice.

7 Strong seasonal nature Strong seasonality pattern with significant implications for the businesses operating in that sector. With e.g. part time and temporary work, the industry tries to cope with highly irregular business pattern. Seasonality can be seen as a major barrier to improve the overall working conditions within the industry.

8 High turnover in personnel Difficulties in attracting and keeping personnel Tourism industry as a job creator People with a weaker position in the labour market BUT… Anti social working hours Temporary working contracts Low financial remuneration Limited career prospects Mismatch supply and demand in education → Bad image of the sector as employer? → Difficulties in attracting the necessary skills → High turnover in personnel

9 Low labour productivity Tourism related industries under strong pressure to improve labour productivity Growth in labour productivity lower than in other regions worldwide Other sectors are more productive and can offer better remuneration Is low labour productivity in different sub-sectors major barrier to improve competitiveness? Accommodation: low labour productivity, but relatively high profitability TO& TA : higher labour productivity, but profitability is much lower Differences in labour productivity and profitability certainly need further research.

10 What about inbound tourism? Intra-European travellers and outbound tourists, but what about inbound tourists? Focus of industry strongly on intra-European and outbound tourism, little consideration of inbound tourism European travel market is largely a mature one Non-European regions promising as source markets Should the industry focus more on inbound tourism?

11 Innovation and creativity Lack of innovation to provide answers to different challenges: Still strong focus on price to compete. Not enough attention for creation of added value for customers. Few innovative initiatives to reduce seasonality. Limited approach to differentiated markets. Tourism businesses pay little attention to climate change issues. Eco-innovation – high on the research agenda of many other industries – has hardly entered the tourism industry. Innovative solutions to tackle challenges largely missing at the moment.

12 Role of public actors Involvement of public sector, but what is its exact role? Public sector is active in many stages of ‘tourism production process’. Provide necessary infrastructure (airports, railroads, motorways) Promote destinations through national tourist boards Directly supply services to industry ( museums, nature parks, … ) Create regulatory framework for tourism companies In some Member States regional, rather than national, authorities are responsible for tourism promotion. EU, national, regional and local authorities have a significant role to play in further development of tourism industry in Europe. How should this role be optimally defined to create the best synergies between public and private initiatives?

13 Access to finance Tourism industry is a vulnerable industry in which access to finance is crucial Travel demand is elastic Tourism is often seen as a vulnerable industry. Acces to finance is an overall concern for the tourism industry, but especially in times of crisis it becomes a major challenge.

14 SWOT of EU tourism industry

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