Jon Sundbo Innovation in tourism Centre of Service

Jon Sundbo: Innovation in tourism Centre of Service Studies, Roskilde University, Denmark Palma de Mallorca n n 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?

Jon Sundbo: Innovation in tourism 1. Innovation in services in general n 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)

Jon Sundbo: Innovation in tourism 1. Innovation in services in general n 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

Jon Sundbo: Innovation in tourism 1. Innovation in services in general n Entrepreneurship - new firms – Many new service firms (particularly retail, knowledge services and restaurants) – Are they innovative? – High death rate

Jon Sundbo: Innovation in tourism 1. Innovation in services in general n 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

Jon Sundbo: Innovation in tourism 2. Innovation in tourism n 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 1999 Finance Knowledge Other Transport Operationel Retail, wholesale Tourism Service average 70 54 53 40 35 34 31 43 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000 Islas Baleares 2001 Hotels 86 Source: Orfila-Sintes, Crespí-Cladera and Martínez-Ros, Universitat de Islas Baleares 2004

Jon Sundbo: Innovation in tourism 2. Innovation in tourism n Tourism firms not very innovation oriented It is an important challenge to develop new services Percentage answering important and very important Finance Other Knowledge Retail, wholesale Tourism Transport Operationel 86 79 72 66 63 61 59 Service average 69 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000

Jon Sundbo: Innovation in tourism 2. Innovation in tourism n 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 Business plan or strategy 23 Quality control systems (customer satisfaction) Fixed routines for how to carry out tasks Training plan for employees 21 16 25 8 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000 Highets sector 81 16 25 8 53 70 61

Jon Sundbo: Innovation in tourism 2. Innovation in tourism n 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 n The innovation problem in tourism seems to be size Family businesses that not want to develop

Jon Sundbo: Innovation in tourism 2. Innovation in tourism n 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 Hotel and restaurant Lowest sector Highest sector New firms 5 4 14 Jobs 36 35 60 Turnover 40 32 82 Export 92 14 92 Value added 40 40 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

Jon Sundbo: Innovation in tourism 2. Innovation in tourism n 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

Jon Sundbo: Innovation in tourism 2. Innovation in tourism n 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

Jon Sundbo: Innovation in tourism 3. ICT and innovation in tourism n Tourist firms use Internet and e-mails for marketing and booking (except some small ones) Percentage of products sold via the Internet - Spain 2003 Percentage of tourist products sold via the Internet - Spain 2003 Music Books Adult material Software Electronics Travels Airplane tickets Hotels Holiday packets Car rents 28 27 26 19 18 18 Source: Guzman, de Vincente, Rodriquez and Sánchez 2004 78 11 6 5

Jon Sundbo: Innovation in tourism 3. ICT and innovation in tourism n 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 Knowledge Retail, wholesale Transport Other Operationel Tourism 95 86 81 77 74 71 53 Service average 78 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000

Jon Sundbo: Innovation in tourism 3. ICT and innovation in tourism n 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 ICT Other technology Most innovative 77 44 Least innovative 44 29 Source: Danish Ministry of Industry, Gallup and Roskilde University 2000

Jon Sundbo: Innovation in tourism 3. ICT and innovation in tourism n Technologiocal innovations (% of hotels - Islas Baleares) Areas of Technological Innovation No change Quality management Environmental quality management Hardware and computer systems ICT in external management ICT in internal management Kitchen equipment Restaurant equipment Rooms facilities Maintenance and saving in supplies Security systems Laundry and cleaning 74 81 32 57 68 38 37 23 55 49 51 Innovation Improvement Outsource/ central 15 9 3 10 7 2 12 52 4 26 14 4 14 16 2 2 59 1 2 60 1 2 74 1 18 26 1 15 34 3 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

Jon Sundbo: Innovation in tourism 3. ICT and innovation in tourism n Introduction of ICT-based innovations Barriers (Case: TQ 3 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

Jon Sundbo: Innovation in tourism 3. 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

Jon Sundbo: Innovation in tourism 4. How can we improve (ICT) innovation in tourism n 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?

Jon Sundbo: Innovation in tourism 4. How can we improve (ICT) innovation in tourism n 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

Jon Sundbo: Innovation in tourism 4. How can we improve (ICT) innovation in tourism n 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?