Prof. Salvatore Messina, SME and tourism
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settembre 2, 2016

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Article by Prof. Salvatore Messina and Prof. Francesco Redi

Marco Polo, an innovative system for the promotion of the small enterprises through tourism – part 1

by Prof. Salvatore Messina and Prof. Francesco Redi

published on Business School of Prague’s Journal of Tourism and Services, #4-2012 – [ISSN 1804-5650]

Abstract

Considering the “European Charter for small enterprises”, the paper starts investigating on the impact of tourism on related industries on regard of employment, receipts, innovation and synergies. At the same time, the role of small enterprises in the tourism industry will be analysed in order to understand how they increase the attractiveness of the territory or of the tourist destinations. The works will focus on the Marco Polo system, an innovative tourist promotional system based on ICT hat is aimed to enhance the tourist attractiveness of the territory at a whole by exploiting its excellence. The system will be described carefully and benefits, expected results and outputs will be investigated in order to demonstrate how tourism can contribute to multiply local income.

 

1. Introduction: Small Medium Enterprises: the backbone of European economy

1.1 The importance in the EU economy

According to Eurostat [1], in 2005 enterprises not involved in the financial business (said “NFBE”) were about 20 million in the EU27 and the 99.8% counted up to 249 employees, that is that nearly all were small and medium enterprises. Among them, 99.6% are small (less than 50 employees) and the 0.6% are medium-sized.

According to that statistic, the share of SME in the economy varied only marginally among the Member States and it is recorded that the contribution to employment was the 67% of the total and the value added the 58%.

For this reason small medium enterprises can be defined [2] the backbone of European economy as a driver of employment, productivity, innovation and social integrations. SME are considered the focus for the transition to a knowledge-based economy, as set by the Strategy of Lisbon. The “European Charter for Small Enterprises” approved by the Feira European Council on June the 19th and 20th, 2000 urges the creation of a friendly environment for the development of small medium enterprises as the situation “can be improved by action to stimulate entrepreneurship, to evaluate existing measures, and when necessary, to make them small-business-friendly, and to ensure that policy-makers take due consideration of small businesses needs”.

By considering all aspects, the European Council is committed to work along the following lines for action, that take into consideration the SME needs:

  • – Education and training for entrepreneurship
  • – Cheaper and faster start-up
  • – Better legislation and regulation
  • – Availability of skills
  • – Improving online access
  • – More out of the Single Market
  • – Taxation and financial matters
  • – Strenghten the technological capacity of small enterprises
  • – Successful e-business models and top-class small business support
  • – Develop stronger, more effective representation of small enterprises’ interestes at Union and national level

Same considerations are made by the OECD [3] that push for the policies for a conducive entrepreneurial business environment and targeted support programmes to enhance the role of SMEs in global value chains.

1.2 SME and tourism

In 2006 [4] almost the 90% of the European 1.8 million enterprises operating in the tourism industry were located in the EU15 and Spain, France, Italy, Germany and the UK host the largest number among all. Considering the concentration of tourist enterprises per 10 000 inhabitants, it is registered that the highest value is in Cyprus followed by Greece, Malta and Portugal.

The investigation of the structure of the sector leads to dual structure that can be summarised by the following topics:

  • – demand is global while supply of good and services is local;
  • – limited number of large company organise tourism to different destinations and a large group of small companies is in charge of delivering services at destinations;
  • – big companies are in charge of organising, transport and information while small companies are in charge of welcoming, hospitality and leisure.

The EU tourism industry [5] generates more than 5% of the EU GDP, with about 1.8 million enterprises employing around 5.2% of the total labour force (approximately 9.7 million jobs). When related sectors are taken into acount, the estimated contribution of tourism to GDP creation is much higher: tourism indirectly generates more than 10% of the European Union’s GDP and provides about 12% of the labour force.

According to the DG Enterprises study [4], micro-enterprises are the largest number of companies involved in the tourism industry accounting a 90% of share and they are characterised by employing less than 10 individuals and, in generale, tourist companies employ an average of 5.5 people.

Despite the large domination in numbers of small enterprises, medium and large-sized ones contribute considerably on the total employment.

1.3 Linkage with other sectors

Tourism is an industry where linkages with other sectors are very important.

The induced businesses that benefits from the positive impacts of the tourism industry are several.

The “Study on competitiveness of EU tourism industry” [4] describes three of these. The first is “attractions”, that gathers culture, amusement parks, festivals, museums and gastronomy, but we can also include local products. This class interest this paper as it includes several small enterprises involved in the agricultural and gastronomic business that benefit from the tourist local consumption of goods along with the handcraft enterprises that supply goods for tourist businesses and to tourists as souvenirs.

“Transport” benefits from the traffic generated locally by the tourist flows and “restaurants and cafés” that don’t attract tourism themselves but, once tourists are there, they will use them.

The High Level Group on Tourism and Employment [6] in 1998 estimated the turnover share generated by tourism including the complementary and ancillary services in which tourism impacts, as described in figure 2.

The list of businesses and sectors that benefit from tourism is very large as gastronomy, souvenir industry, retail business, publishers, cosmetics, clothing, consultants, et cetera.

As stated above and considering that goods and services are mostly supplied by local small enterprises, it is correct to affirm that tourism generates benefits for the local development.

As mentioned by the University of Cambridge [7], “…when an area develops as a tourist destination, the local economy benefits because new jobs are created and visitors bring more business to local shops and restaurants. The incom generated can then be used to improve local services, whether by developing better transport and infrastructure, or by providinf more facilities for residents and visitors, such as leisure centres, shopping areas and entertainment or attractions. That is know as the multiplier effect.”

An area benefits directly and indirectly from tourist’ expenditure. Hotels and other leisure facilities are impacted directly but other business benefits from the presence of tourists in the area: shops, banks, small industries as they are suppliers of the tourist enterprises.

However, “… a portion of the visitor’s payment to the hotel is lost to the area, through taxation paid by the hotel to the government, or to the suppliers outside the local area. This is known as leakage from local economy”.

2. European issues on tourism

From the analysis of the Policies for tourism [7,8,9,10,11], European, national and local, we can define the key issues and are subject to greater commitment from the institutions involved.

Two main topics, sustainability and competitiveness, are identified.

Understanding sustainability both from a social, cultural, economic and natural point of view but also in order to design and implement models of tourism development that does not have negative impacts for future generations. This topic becomes increasingly a requirement starting with the environmental issues that concern the public administrators, academics, public opinion, in the light of the failure of past development patterns.

Competition takes on a new meaning that is understood as economic efficiency combined with sustainability; a company must now be more efficient in order to bear costs arising from sustainability, from side a social need but on the other hand a stronger connotation of international tourism demand.

These topics must be declined in other sectoral issues in order to make European tourism more sustainable and competitive.

The integration of policies at all levels (EU, national, regional and local) plays a strategic role in order to plan, regulate and develop a sustainable and competitive European tourism, which now appears jagged.

The cooperation between the various stakeholders in the sector, both public and private, and in a cross between public and private is very necessary in view fo the large number and variety of organizations involved and the challenges at a systemic level that tourism is facing.

In order to improve performance in terms of planning, implementation and profitability, sustainable tourism requires more knowledge that should be implemented through the creation of diffused network throughout Europe as well as the creation of a permanent observatory on sustainable tourism.

Human resources are the heart of the tourist service and of the quality perceived by tourists: it is stimulated a general growth of skills, the need of new professionalism and, above all, expertise for the development of sustainable tourism. In this regard, training of qualified people is needed to increase the competitiveness of European tourism in light of the strong competition from emerging Countries.

Better professionals in tourism also imply an effective use of ICT in tourism that have altered the distribution chain in addition to relaying more quickly information and allowing the tourists to be able to plan and purchase their own holiday package. But it also means innovation, which is important for creating new products or new ways of making European tourism more sustainable and competitive.

The tourism sector is composed of a multitude of small and medium-sized companies that operate locally offering hospitality services, entertainment and other local services but, in term of size, lack of skills and structure, face daily enormous difficulties that prevent them from developing, limiting the possibilities of growth in the sector. For this reason one of the key issues is to support SMEs and their needs from a point of view of competence, as seen previously, but also in terms of finance, regulation and taxation, to give them a momentum that will allow, consequently, the entire tourism sector to become more competitive and therefore, in the light of the new definition of competitiveness, sustainable.

To be more sustainable European tourism is faced with greater vigor the challenge of seasonality that characterizes today’s tourism. The efforts of policy makers are designed to allow to target tourists to have holiday outside of peak periods, decongesting the tourist destinations in those periods and allowing tourism businesses to work, create growth and employment in a more continuous and stable way. This can also be achieved through policies of social tourism, for example by allowing groups of people (elderly, disable or economically disadvantaged groups) to have a holiday in low season, relying on policies of price differentiation also supported by vouchers, as is happening, for example, in France and Italy.

But, in order to make the European tourism more sustainable and competitive it is necessary to design and manage a set of indicators which, in addition to clearly define what are the boundaries of sustainable tourism, monitor the growth of European tourism in order to effectively govern the process of development of European tourism.

References

[1] Enterprises by size class – overview of SMEs in the EU, Eurostat, Statistics in focus n. 31/08, Manfred Schmiemann

[2] European Charter for Small Enterprises, approved by the Feira European Council on 19 and 20 June 2000

[3] Enhancing the Role of SMEs in Global Value Chains, OECD Global Conference in Tokyo, 31 May – 1 June 2007

[4] Study on competitiveness of EU tourism industry, DG Enterprises, September 2009

[5] http://ec.europa.eu/enterprise/sectors/tourism/index_en.htm

[6] Conclusions and Recommendations of the High Level Group on Tourism and Employment, October 1998, European Commission

[7] Travel and Tourism, Rowe Smith and Borein, University of Cambridge, 2002

[8] “Renewed EU Tourism Policy: Towards a stronger partnership for European Tourism”, COM(2006) 134 on March the 17th 2003

[9] “Action for a more Sustainable European Tourism”, report of the Tourism Sustainable Group on February 2007

[10] “Agenda for a sustainable and competitive European tourism”, COM(2007) 621 on October the 19th 2007

[11] “Europe, the world’s No 1 tourist destination – a new political framework for tourism in Europe”, COM(2010) 352

 

Brief description of Author/Authors:

Prof. Salvatore Messina

Professor Salvatore Messina is the Rector of the European University for Tourism from July 3, 2008, where he is also Professor of International Economic Policy. Prof. Salvatore Messina has been Professor of International Economic Policy at the University of Elbasan, Associate Professor of Marketing and Tourism Marketing at the University of Quebec in Montreal and at the University of Paris XIII, Visiting Professor in many universities in Europe and North America.

Profesor Salvatore Messina is a member of the Scientific Committee of the Knowledge Network of the World Tourism Organization of the United Nations, member of the Scientific Committee of NECSTouR-Network of European Regions for a Sustainable and Competitive Tourism, Director of “Tungjatjeta” – International Journal of Tourism Policy and Member of the Board of Editors of scientific journals in the field of tourism both in Europe and extra EU.

Prof. Francesco Redi

He is an Italian professor in the field of Tourism with a focus on Politics of Tourism and EU Funds for Tourism, mainly at the European University for Tourism based in Albania and Italy where he is he is member of the Board of Director, Director for International Relation and of the EU project laboratory. He’s lecturer of International Economic Policies at Link Campus University in Rome (Italy) and of Policies for Territorial Development at the Second University of Naples (Italy). He’s member of the Academic Committee of NECSTouR (Network of European Regions for Sustainable and Sustaianble Tourism) and represent the European University for Tourism in the Knowledge of Network of UNWTO. In order to implement the models developed in his academic activities, he is Director of the Local Action Group Cilento Regeneratio (Italy).

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