In the long term, the tourism industry is destined to be an important source of economic growth and job creation. Few sectors can expect growth in excess of 60% in just over a decade: the number of international tourists is predicted to rise from 1.09 billion in 2013 to 1.8 billion in 2030.1 And it cannot be argued that this growth is due to the sector's small size since domestic and international tourism generated 9% of GDP in the OECD in 2012. Given this favourable outlook, can Europe's tourist destinations create some kind of strategy to ensure they do not let this opportunity pass by? Because we must remember that, although Europe attracted 52% of the world's international tourist arrivals in 2012, the emergence of new tourist destinations is making the competition increasingly tough. One clear indication of this is the fact that the average increase in the number of foreign tourists in the European Union between 2005 and 2012 was 1.7% annually while the rest of the world recorded a growth of 5.0%.
Strategies aimed at reinforcing the importance of tourism in an economy usually rely on three key factors: (i) attracting a larger number of tourists; (ii) increasing their average expenditure and (iii) widening the impact of the tourism industry to the rest of the country's economic activities. This being the overall approach, the emphasis placed by a country on each of these factors can vary significantly and economies with a more mature tourism industry will typically focus more on the last two aspects.
In spite of such distinctions, attracting a larger number of tourists is still a decisive factor for the future, especially given the sharp growth predicted in the total volume of tourists. Although other aspects also come into play, the industry's competitiveness is undoubtedly one of the most important in terms of attracting tourists. As can be seen in the graph, this is closely related to the number of foreign tourist arrivals.2 In fact, those countries with the greatest improvement in competitiveness over the last few years were precisely those that increased their share of tourists the most. However, the range of actions available to a country to improve its tourism competitiveness is very wide, including areas as diverse as infrastructures, regulation, transport, promotion of cultural activities and environmental conservation. What is the right mix?
Let us look at the case of New Zealand, one of the countries that have seen the most progress over the last few years in terms of tourism competitiveness. An analysis of the subcomponents in the competitiveness index shows that, in addition to a privileged natural environment, the country has also become more attractive for tourists due to appropriate regulation which has helped develop its tourism infrastructure. Although this is the first lesson to be learned, it is not the only one: the improvement in New Zealand's tourism industry is the result of a strategy established some time ago in response to a negative shock that had unexpected consequences. In the 1980s, the loss of its privileged trading terms with the United Kingdom led to a significant shift in the country's foreign policy. The need to find new trading partners led New Zealand's producers, in coordination with the public sector, to develop a framework that related product quality with one of the country's key defining features: the rich natural environment in which they were made.
But in addition to benefitting from exports of goods, this campaign also managed to place New Zealand on the international tourism map. In this way, the world's largest exporter of sheep became, gradually and in a unique natural environment, the capital of adventure sport, a type of tourism that boomed in the 1990s. Use of this tourism strategy, together with the media impact of filming the Lord of the Rings trilogy in the country, helped to keep its tourism industry healthy at the start of the 21st century. This can be seen in the sharp rise in foreign tourist arrivals between 1998 and 2004, namely 57.6%, compared with 23.3% for the world as a whole.
Today, tourism generates close to 9% of New Zealand's GDP (if we also include its indirect impact on the economy), a figure that denotes the maturity achieved by the industry. Nevertheless, the country has made a huge effort, in a very wide range of areas, to keep its tourism dynamic. The measures adopted to preserve its natural heritage are particularly of note. A case in point is the creation of a quality credential (Qualmark) to recognise those tourism firms that respect the environment. Secondly, the public and private sector have continued to support the formula of sports tourism in the heart of nature, creating a network of cycling routes that cover a large part of the country. But they haven not forgotten to promote new forms of tourism, encouraging activities that immerse visitors in Maori culture, helping to extend the industry's effects to new regions. Lastly, measures have also been adopted to help foreign tourists enter the country, such as making visa applications easier and reducing delays at airports while documentation is being checked.
The case of New Zealand, therefore, shows the importance of choosing a model of tourism business that exploits a region's competitive advantages, tailoring them to the preferences of long-term demand. Is there any market segment in Europe that could potentially combine both dimensions, namely competitiveness and the demand expected? One firm candidate is cultural tourism. This takes advantage of a region's tangible and intangible cultural assets (which might be highly disparate in nature, such as architecture, gastronomy, dance, crafts, music and sports events or historical monuments) to differentiate it from other tourist destinations. And Europe is proving to be quite skilful in exploiting its relative competitive advantages in this area. The great cultural attraction of European countries is often acknowledged (heading the list of countries with the most cultural resources). But, as can be seen in the second graph, European countries also top the ranking for tourism competitiveness in the cultural segment. Nevertheless, there is still a lot to be done in terms of competitiveness: although Europe is already in good shape in cultural terms, New Zealand's lesson regarding the importance of improving the regulatory situation should not be ignored.
The second of the elements mentioned, namely long-term demand, is also promising. The trend in tourism demand, with increasingly older tourists with a greater knowledge of culture, indicates a growing preference towards this kind of tourism. One clear example of how healthy cultural tourism is can be seen in the number of annual visitors to the world's three leading museums (the Louvre in Paris, the British Museum in London and the Metropolitan Museum of Art in New York). In 2013, these three museums received 22.3 million visitors, of which approximately 13 million were foreigners, a figure that exceeds the number of tourists visiting the Netherlands or Switzerland.
Such figures remind us that the cultural segment particularly fulfills the aim of the first of the aforementioned factors within strategies to promote tourism, namely increasing the number of tourists. But it also proves to be a powerful tool insofar as cultural tourists tend to have a significantly higher expenditure than those in other activities, as well as having the potential to spread to other economic areas. This can be seen in the sector's propensity to create hybrids with other segments, thereby extending the benefits from tourism to new geographical areas that had previously not been able to take advantage of the sector. To mention just one example, this is the case of the combination of tourism-gastronomy-viticulture, of growing importance in significant tourist destinations such as France, Spain, Italy and Portugal. And perhaps this might be Europe's recipe to take advantage of the future growth in tourism: creatively combining innovation and tradition.
Joan Daniel Pina and Àlex Ruiz
European Unit and International Unit, Research Department,
1. See UNWTO «Tourism Highlights», 2013.
2. We used the index elaborated by the World Economic Forum to measure a country's tourism competitiveness. This index is computed using 14 subcomponents that cover key aspects of a country's tourism competitiveness. For more information see «World Economic Forum: The travel and tourism competitiveness index 2013».