3 Mar, 2008
OECD Report Analyses Impact of Globalisation on Tourism SMEs
Helping small & medium sized enterprises in the travel & tourism industry compete and survive in the age of globalisation is the subject of a major report on tourism in the Organisation of Economic Cooperation and Development (OECD) countries released by the Paris-based organisation last week.
The report examines the effects of increasing globalisation on tourism SMEs and analyses the nature of the global value chains in which tourism SMES now operate. It also includes a series of case studies in Australia, Austria, Germany, Korea, Spain, Poland and Switzerland to identify key issues facing tourism SMEs.
In 2007, the 30 OECD member countries represented 60% of international arrivals. Eight out of ten of the main tourism destinations in the world are OECD countries. Tourism in OECD countries accounts for between 2 and 12 per cent of GDP, between 3 and 11 per cent of employment and on average about 30% of service exports.
The report says the focus on SMEs is part of an emerging “new paradigm for international tourism policy” that is needed within the developed OECD countries as they face increasing competition from the developing countries.
“The globalisation process strengthens worldwide competition and stimulates structural change in the tourism industry. The steady growth of international tourism ensures that this process is not a zero-sum game. It creates new market potential for the OECD member countries, as their unique attractions increase both the willingness to pay and the expenditure of their potential visitors.
“Conversely, it has to be taken into account that tourism related industries in developed countries are not only under global competitive pressures. They are also competing in factor markets (e.g. labour and capital), with other sectors that are more productive. It is necessary therefore, to promote productivity-based growth in tourism in OECD countries.”
Hence, the report says, “Tourism-related industries must increase their competitiveness in domestic factor markets and use scarce resources in more efficient and innovative ways in order to develop and to market competitive products. The state can stimulate this process by offering macro-economic stability, a tourism-friendly business environment, attractive public goods and an innovation-oriented tourism policy.”
A key focus of the report is to encourage greater co-operation between tourism SMEs via local networks and clusters.
The case studies demonstrate that, “for some SMEs at least, the effects of the globalisation of the tourism industry on small businesses are not fully appreciated.
“In some cases there is a lack of awareness of the importance of global value chains to their businesses. It also follows that many SMEs are unsure how best to tap into the new opportunities presented, either because of a lack of skills or because of a feeling that small businesses are powerless in the face of the power of multinational enterprises.”
In fact, the report says, “SMEs can benefit from globalisation by means such as the exploitation of networks and clusters, and by the adoption of new technologies.
“Strength can be drawn from local clusters and networks, while at the same time SMEs can utilise the digital revolution to their advantage, notably by maximising their use of the Internet for marketing purposes and as a means of getting in touch directly with their client base, the report says.
It adds, “Access to the Internet is now indispensable for all tourism enterprises, not least because it has empowered the consumer as never before to do business directly with tourism service suppliers.
“Case studies reveal that SMEs in many tourism destinations are finding it hard to take full advantage of the power that the Internet gives them to compete on a more level playing field with the major travel companies in their sector.
“Some of the challenges they face include the need to boost the technical competence of SME staff, the need to ensure that the quality and standards provided by SMEs reach international best practice, and the ways in which SMEs can act to overcome the inherent problems of small size.”
The report calls on Governments to introduce policies “that are supportive of tourism SMEs without being intrusive.”
“While the case studies revealed an understandable resistance on the part of SME owners and managers to too much direct government intervention in their businesses, the research also highlights a variety of indirect, policy-based interventions that can be helpful to tourism SMEs by the creation of an enabling and supportive environment.
“Opportunities for constructive government interventions include taking action where market failures inhibit the ability of SMEs to respond to new market realities, ensuring that SMEs are able to receive support in areas such as training, marketing, financial support and ICT skills, and encouraging and, if necessary, educating SMEs about the advantages of clusters and networks.
“Governments can assist in raising awareness of the potential of global value chains among SMEs, encourage a culture of innovation and establish accreditation standards and quality norms that can be met by SMEs in the tourism sector.”
Further details: www.oecd.org/cfe/tourism
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