Conclusions of the Conference on Innovation and Growth in Tourism

In Lugano (Switzerland), the OECD Tourism Committee was the first intergovernmental body to examine in-depth the relationship between growth and innovation in the area of tourism. This paper examines the main issues raised during the Lugano Conference: ! Why does tourism in the developed OECD countries urgently need to innovate? ! What factors are preventing the much needed restructuring of the tourism industry? ! How are new tourism structures created? ! Is the tourism sector innovative? ! Are tourism innovations predictable, can they be planned? ! How does the tourism innovation process function at the corporate level? ! Is there a need for an innovation-oriented tourism policy? ! What can do the State to promote innovation? Growth and productivity problems Many of the OECD countries with a long tradition in tourism are suffering from growth and production weaknesses. The tourism market share of the developed OECD countries in the world has fallen. Moreover, the part of tourism to gross domestic product has fallen compared to the combined parts of the industrial and services sectors. Tourism enterprises and industry branches are under tremendous competitive pressures. In a much liberalised world tourism market, they are competing with new destinations that can benefit from resources that are intact or in any case very little exploited, and from very favourable economic conditions including low wages and soft currencies. The tourism industry has a productivity problem due to its fragmented nature, being made up of predominantly small-to-medium sized enterprises (SMEs) and to its high labour intensity. The tourism industry is, however, already relatively highly rationalised. Even so, core tourism industries, like accommodation and catering, are less productive than other economic sectors due to the personalised nature of their services. This difference in productivity observed in tourism compared to the rest of the economy has to be reflected in the price, thus reducing tourism’s competitiveness and ability to sell its products. The relatively low level of productivity also reduces the competitiveness of the sector in the capital and labour markets.