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Innovation in Tourism: Challenges and Strategies for Improvement

This article explores the general characteristics of innovation in services, with a focus on the tourism sector. It discusses the low innovation rate in tourism and suggests strategies for improving innovation in the industry. The importance of technology, entrepreneurship, and networking in driving innovation is also examined.

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Innovation in Tourism: Challenges and Strategies for Improvement

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  1. Jon Sundbo: Innovation in tourismCentre of Service Studies, Roskilde University, Denmark Palma de Mallorca 29 September 2004 • 1. Innovation in services in general • 2. Innovation in tourism - what do we know? • 3. ICT and innovation in tourism • 4. How can we improve tourism (ICT) innovations?

  2. Jon Sundbo: Innovation in tourism1. Innovation in services in general • Characteristics of service innovations • Service firms not so innovative • Ad hoc innovations; quick, practical ideas • Small improvements • Often integrated (product, process, organization, market) • Not science based; no R&D • Customer ínteraction often the source of innovative ideas (e.g. quality problems, unrealised customer problems, customers present ideas)

  3. Jon Sundbo: Innovation in tourism1. Innovation in services in general • Organizing innovation activities • Ad hoc processes; not well organized • A few service firms have an innovation department • Dual organization: Innovation from the top: Projects Innovation from the bottom: Ideas coming up Successful firms combine the two processes and embed them in the strategy

  4. Jon Sundbo: Innovation in tourism1. Innovation in services in general • Entrepreneurship - new firms • Many new service firms (particularly retail, knowledge services and restaurants) • Are they innovative? • High death rate

  5. Jon Sundbo: Innovation in tourism1. Innovation in services in general • Technological innovation in services • Many innovations non-technological • Technological innovations play an increasing role in services as service firms participate in developing technological innovations • Non-technological Depending on Technological technology 25 % 23 % 52 % Source: Roskilde University Denmark 2000

  6. Jon Sundbo: Innovation in tourism2. Innovation in tourism • The tourist sector has a low innovation rate Innovation tendencies in Percentage answering The firm has within the last two years developed new services or production-processes Danish service industries 1999Islas Baleares 2001 Finance 70 Knowledge 54 Other 53 Transport 40 Operationel 35 Retail, wholesale 34 Tourism 31 Hotels 86 Service average 43 Source: Danish Ministry of Industry, Source: Orfila-Sintes, Crespí-Cladera and Martínez-Ros, Gallup and Roskilde University 2000Universitat de Islas Baleares 2004

  7. Jon Sundbo: Innovation in tourism2. Innovation in tourism • Tourism firms not very innovation oriented It is an important challenge to develop new services Percentage answering important and very important Finance 86 Other 79 Knowledge 72 Retail, wholesale 66 Tourism 63 Transport 61 Operationel 59 Service average 69 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000

  8. Jon Sundbo: Innovation in tourism2. Innovation in tourism • A cummulative effect - tourism firms do not apply management tools at all Tourism firms in relation to the lowest and highest service sector Percentage answering Tourism Lowest sector Highets sector Business plan or strategy 23 21 81 Quality control systems (customer satisfaction) 16 16 53 Fixed routines for how to carry out tasks 25 25 70 Training plan for employees 8 8 61 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000

  9. Jon Sundbo: Innovation in tourism2. Innovation in tourism • Depending on size • Larger firms most innovative • Tourism (hotel and restaurant) in the middle if the size factor is eliminated: Above transport, retail and operational Below knowledge services and finance • The innovation problem in tourism seems to be size Family businesses that not want to develop

  10. Jon Sundbo: Innovation in tourism2. Innovation in tourism • Entrepreneurship - new firms • Many new firms (particularly restaurants) - but they are not particularly innovative • Growth-creators’* part of the sector’s new firms, jobs, turnover, export and value added • Percentage of the total of the sector • New Jobs Turnover Export Value added • firms • Hotel and restaurant 5 36 40 92 40 • Lowest sector 4 35 32 14 40 • Highest sector 14 60 82 92 70 • * New entrepreneur firms > 150.000 Euros turnover and yearly growth > 100 pct. (2001) • Other sectors: Manufacturing, construction, wholesale, retail, transport, business services, other service. • Source: The Danish GEM 2003

  11. Jon Sundbo: Innovation in tourism2. Innovation in tourism • Networking, importance of the destination • Innovations are only to a limited degree destination based • Tourist firms are relatively bad at participating in innovative networks (best: tour operators and travel agencies, cultural institutions and attractions worst: hotel, camping sites, restaurants) • Tourist firms mutually suspicious in local networks (maybe exception in Spain (Malaga)) • Tourist firms choose among several networks • Non-local networks more important for innovation than local

  12. Jon Sundbo: Innovation in tourism2. Innovation in tourism • Most network-oriented and innovative branches (DK) Network-oriented and innovative - Charter companies and travel agencies Self-oriented and innovative - Transport companies, tourist informations, attractions Self-oriented and less innovative - Hotels, camping sites, restaurants

  13. Jon Sundbo: Innovation in tourism3. ICT and innovation in tourism • Tourist firms use Internet and e-mails for marketing and booking (except some small ones) Percentage of products sold via Percentage of tourist products sold via the Internet the Internet - Spain 2003 - Spain 2003 Music 28 Airplane tickets 78 Books 27 Hotels 11 Adult material 26 Holiday packets 6 Software 19Car rents 5 Electronics 18 Travels 18 Source: Guzman, de Vincente, Rodriquez and Sánchez 2004

  14. Jon Sundbo: Innovation in tourism3. ICT and innovation in tourism • Tourist firms are not very aware of the need of using ICT: Use of new technology becomes much more important for competitiveness Percentage answering agree or partly agree Finance 95 Knowledge 86 Retail, wholesale 81 Transport 77 Other 74 Operationel 71 Tourism 53 Service average 78 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000

  15. Jon Sundbo: Innovation in tourism3. ICT and innovation in tourism • The most innovative tourist firms emphasize technology mostly Use of new technology becomes much more important for competitivenesss Percentage tourism firms answering agree or partly agree Most innovative Least innovative ICT 77 44 Other technology 44 29 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000

  16. Jon Sundbo: Innovation in tourism3. ICT and innovation in tourism • Technologiocal innovations (% of hotels - Islas Baleares) Areas of Technological Innovation No change Innovation Improvement Outsource/ central Quality management 74 15 9 3 Environmental quality management 81 10 7 2 Hardware and computer systems 32 12 52 4 ICT in external management 57 26 14 4 ICT in internal management 68 14 16 2 Kitchen equipment 38 2 59 1 Restaurant equipment 37 2 60 1 Rooms facilities 23 2 74 1 Maintenance and saving in supplies 55 18 26 1 Security systems 49 15 34 3 Laundry and cleaning 51 3 25 21 Technological degree is defined as: a.) No change: establishment does not carry out any innovation activity. b.) Radical innovation: establishment introduces innovation at first time. c.) Incremental innovation: establishment introduces innovation to improve a previous innovation. d.) Outsource/central: establishment outsources or use the central services of a parent company Source: Orfila-Sintes, Crespí-Cladera and Martínez-Ros, Universitat de Islas Baleares 2004

  17. Jon Sundbo: Innovation in tourism3. ICT and innovation in tourism • Introduction of ICT-based innovations Barriers (Case: TQ3 Travel): • Habits and social relations to the service personnel • Customer competence: Technical Content (the tourism service and the conditions of ordering) • The service provider as a co-consumer: Training the user • Help desk function

  18. Jon Sundbo: Innovation in tourism3. ICT and innovation in toúrism The new customer relation as a basis for further innovation: • Help desk problems and complaints as a source • Customer contacts: Not IT people • A system for transmitting problems and complaints into innovative ideas

  19. Jon Sundbo: Innovation in tourism4. How can we improve (ICT) innovation in tourism • General innovation - Experience based development groups - Innovation departments in large firms - Methods: Surveys (benchmarking), Idea creation Development (project groups), Implementation (market launching, internal implementation) - A clear strategy - Who takes care of the small firms?

  20. Jon Sundbo: Innovation in tourism4. How can we improve (ICT) innovation in tourism • ICT innovations - ICT networks (e.g. the Web net) for marketing and booking - ICT within the tourism firm: Process innovation: (administrative systems - extended, e.g. booking taxis, ordering meals) Product innovation: Integrated in attractions (museums, amusement parks) In hotels and restaurants: wanted? (e.g. concept restaurants - a computer nerd restaurant? - or the TV and PC free hotel?) - From supplier to user dominance

  21. Jon Sundbo: Innovation in tourism4. How can we improve (ICT) innovation in tourism • Conclusion - Innovation in tourism is necessary - ICT will be a part of the innovation pattern (however the tourist industry should be careful) - Spain - and particularly Islas Baleares - seems to have an advantage by having innovation-oriented hotels Why? How to benefit from that?

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