You might have heard that Saturday, March 25, marked the 60th anniversary of the signing of the Treaty of Rome and the birth of the European Economic Community (EEC). I doubt you knew, however, that nine years before the Treaty of Rome, the European tourism industry, with the help of the Americans, had already created the European Travel Commission as part of the Marshall Plan for rebuilding postwar Europe. Who among those signing the 1957 European trade agreement focusing on coal, steel and agriculture could have imagined that 60 years later tourism would be so vitally important to the European, indeed the global, economy? Who, come to that, could have foreseen the importance of the role of small and medium enterprises in Europe’s tourism industry of 2017?
Try to imagine a tourism experience in Europe without interacting with small- and medium-sized enterprises (SMEs). No taxis, no boutique hotels, no wine tours, no fine dining establishments, no guides, no shopping excursions, no theatres…. SMEs account for two in three tourism jobs in Europe. They are also helping to drive innovation and digital transformation in the travel industry, but if Europe is to foster a culture of innovation and sustainable development, its institutions and legislators must support tourism SMEs.
I had the privilege of moderating a high-level panel discussion on “Assisting European SMEs in Navigating the Digital Landscape” as part of an event called “Connecting Europe through Innovation,” organized by the European Parliament, the United Nations World Tourism Organization (UNWTO) and Amadeus. The objective of my 60-minute debate between private- and public-sector experts was to discuss the role of SMEs in tourism and check that Europe’s institutions are able to provide the right conditions for these small seeds of innovation to take root, grow and flourish.
Held in the European Commission’s headquarters in Madrid, this was obviously a Eurocentric event, but the messages and interactions between public- and private-sector leaders are applicable to the U.S. or any other region.
I started by asking the institutional representatives for their views and policies. First, I asked Juliana Gabriela Aluaș, deputy head of unit of the European Commission, DG GROW, Unit F4 – Tourism, Emerging and Creative Industries, what the European Commission is doing to help SMEs take advantage of the opportunities provided by the digital market, and she replied with the following:
“Digital transformation is an indispensable condition for the competitiveness of the travel and tourism sector, and it allows the sector to respond to new consumer demands. Our actions are diverse and meant to create a regulatory and investment environment favorable for enhancing digital economy, in line with the conviction that Europe’s future is digital. The Commission has launched several actions to tackle the regulatory and administrative obstacles underlining digital transformation, including exploitation of big data and online platforms. The Commission facilitates networking and exchange of best practices and experience and provides funding opportunities.
Tourism is one of the sectors most impacted by the digital revolution. Our actions aim to support tourism SMEs – who often find it difficult to keep up with the rapid evolution of digitalization – to improve their uptake of digital tools and online marketing and distribution channels. We have set up a dedicated Tourism Business Portal, which helps tourism SMEs with useful information, tutorials and dedicated tools. Secondly, we have organized several YouTube Live events on digital tourism with focus on online marketing. Last but not least, we launched a dedicated Digital Tourism Network, an opportunity to discuss common and specific challenges in tourism digitalization.
We are also looking into the collaborative economy in the short-term accommodation rental sector and organizing targeted workshops to facilitate a constructive dialogue between industry and national/regional authorities and other relevant stakeholders to possibly come up with a set of principles applicable to collaborative economy in the tourism accommodation sector.”
I then asked Cláudia Monteiro de Aguiar, member of the European Parliament, Committee on Transport and Tourism, what Europe’s politicians were doing to support SMEs in their digitalization. She agreed with the remarks of Juliana Aluaș, but added:
“Some of the major challenges still faced by SMEs are the lack of technological knowledge, funds and e-skills. Addressing these challenges is definitely critical to the growth and development of SMEs. Thus, policymakers and private companies should provide training; they should support the creation of qualified jobs and create an SME-friendly environment in order to boost digitalization of tourism businesses.”
The great thing about this event is that it brought representatives of both the public and the private sector together. Then it was time for some practical case studies to see how these political good intentions are being applied on the ground.
The Carmacal calculator is a web-based tool that can calculate the entire carbon footprint of a travel package. This includes transportation, accommodation, excursions and activities. It contains more than 25 transport modes, and calculations of more than 750,000 accommodations and multiple excursions and activities. It is a unique and innovative tool that could, and indeed should, be used all over the world. It was developed by ANVR, an association of Dutch tour operators, in collaboration with NHTV, a private university. Carmacal allows travel planners and tour operators to make travel decisions and to create tours based on criteria of sustainability (added to the usual price, quality and convenience variables). To me, this is just the sort of innovation that should be led by the public sector, and yet it is a private sector initiative championed by ANVR and its membership of mainly SMEs. So I asked Gerben Hardeman, manager of Responsible Travel & Tourism, ANVR, how he saw Carmacal being used by European legislators and policymakers. I was interested to learn what level of interest and support they have received from the public sector, if any. Gerben summed it up nicely:
“ANVR is an association of tour operators in Holland. Our membership includes some large companies, but mostly we are SMEs. ANVR requires its members to follow a strict sustainability policy in their respective businesses, but there was no way of measuring how sustainable they were being. We therefore created a tool – initially for our own members, but we would be delighted for the whole industry to make use of it. Carmacal won the UNWTO Award for Innovation in Research and Technology and the WTTC Innovation Award, but we have not sought any support from European institutions in the development of the system. We all (public and private sectors) need to take responsibility to work on carbon management. Carbon management and reduction should be normalized within the travel and tourism industry, and this calculator could be used for strategic and operational purposes. This event is a wonderful opportunity to look for collaboration, innovation, interest and support from the EU. This is an open invitation to European policymakers and the European private sector to start an innovative carbon management project and further develop the tool for various target groups in Europe. I would also like to highlight that more than 80 percent of European holidaymakers value the importance of decreasing the size of their own carbon footprint.”
Our next SME was Travel Compositor, a technology startup that I have been following closely. Their CEO, Manuel Aragonés, and I go back about 20 years to when I was representing the Danish Tourist Board and Manuel was a product manager at a very traditional package tour operator. It is inspiring to see Manuel’s own personal digital transformation from offline package tour operator to online dynamic packager. Travel Compositor is a great example of how an SME can develop technology to help other SMEs be more competitive in a digital environment. It helps traditional travel agencies of every size, and OTAs respond to the market’s demands for a more personalized travel experience. Most interesting for this forum is its ability to allow travelers to book all the elements of a destination’s tourism offering, from multimodal travel to tours, events, transfers, etc. This seemed to me to be perfectly adapted to what the European Commission had said earlier was their objective: helping SMEs in their digitalization. So again, I asked Manuel what sort of support he was getting from the public sector, and this was his response:
“The great thing about Travel Compositor is that it provides instant digitalization for any tourism product or service of any size. It doesn’t require any digital know-how from the tourism SME and gives immediate online promotion and distribution without the SME even needing a website. Ironically, we are a European startup and yet our service has been embraced first by destinations, institutions and companies in America. Here in Europe, it seems that the DMOs are more concerned about the politics of facilitating a digital solution to their local stakeholders.”
As moderator of the panel, I took enormous satisfaction from seeing the representatives from both the European Parliament and the European Commission taking notes with genuine interest in what both ANVR and Travel Compositor were saying.
Having facilitated the partnership between European politics and European business, our next challenge was to bring European destinations into the picture. Most DMOs are public-private partnerships, and Vienna is no exception.
According to international consulting firm Mercer, Vienna is officially “the most livable city in the world,” and its balance between prosperity and sustainability make it a global benchmark as a “Smart City.” The Vienna Tourist Board is one of the most innovative European DMOs, and its Tourism Strategy 2020 has three strong pillars: Global, Smart and Premium. For the purposes of our panel, I focused on Smart. Smart, let’s remember, does not just refer to technology; it also refers to accessibility and sustainibility.
Andrea Kostner, the Vienna Tourist Board’s deputy director of content management and production, explained how the Vienna Tourist Board works with local SMEs to leverage talent and encourage innovation:
“Vienna as a city embraces a culture of sustainability and excels at smart urban technologies and intelligent mobility solutions. We work closely with local technology providers and with our predominantly SME stakeholders in order to make Vienna a ‘smart tourism city’ – a city that offers both visitors and residents an exciting yet relaxed, authentic, comfortable and ‘green’ urban experience.”
Like many DMOs, the Vienna Tourist Board is financed mainly from local taxes taken in by hotels, from the general city budget and from its own revenue. I asked if their sources of finance affect their attitude to the sharing economy, particularly non-hotel accommodation, to which Andrea answered:
“Most of our marketing budget for promoting visitation to Vienna comes through a tax that is paid by visitors through hotels, so clearly we need tourists to use hotel services. It is only fair that if everyone benefits the same from our promotion of tourism to the city, then everyone should also contribute the same. That said, we do have Airbnb in Vienna, but the offer is relatively small compared to our 63,000 hotel beds. This is partly due to the fact that a significant percentage of residential accommodation in the city is subsidized by the government or municipality and can therefore not legally be sublet.”
I thought it best not to get our last panelist, Ramón Estalella of CEHAT, started on the hot subject of non-hotel accommodation. I steered the conversation back to the central question of innovation for SMEs.
CEHAT is the Spanish Confederation of Hotels and Tourism Accommodation providers and is a great example of European best practices for associative travel industry collaboration. Twelve years ago, CEHAT created the Institute for Hotel Technology (ITH) to promote innovation in the industry. I have been participating in their annual event FITURTECH for a few years, and each year it attracts more attention. SMEs, hoteliers, institutions and corporations gather like bees to a hive of innovation, buzzing with excitement and ideas. CEHAT’s members are large and small, but I suspect the smaller hotels in Spain are among the most competitive and technologically advanced in Europe, if not in the world, thanks in part to ITH’s not-for-profit culture of innovation and knowledge sharing. Ramón commented on whether the not-for-profit collaborative model of ITH could be implemented on a European scale:
“I represent CEHAT on a number of European hotel industry associations and events, and we are always expressing the need for more public measures to facilitate innovation and digitalization for SMEs. Technology and innovation are essential, but they mean nothing without the training and information for hoteliers. Yes, the European authorities and institutions must support tech and innovation startups, but not to the detriment of also supporting long-established hotel SMEs. Politicians and institutions are putting resources behind the ‘sexy’ startup culture, but they should not forget their obligation to help make that innovation accessible to the thousands of hotels, many of which are SMEs that represent the backbone of Europe’s tourism industry.”
This last comment was a great reality check to end a one-hour session that sought to encourage straight talking and practical collaboration between the institutions that are often accused of legislating from their ivory towers in Brussels and the representatives of the continent’s all-important small and medium enterprises.
My congratulations to the organizers for actively encouraging public-private partnerships, and my thanks for inviting me along.