How can technology help tourism SMEs bounce back from the pandemic?

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Many tourism businesses have seen their revenues plummet during the pandemic. They now have the opportunity to capitalize on pent-up demand. Photo by Ketut Subiyanto via Pexels

COVID-19 has killed the tourism industry. Today, governments and digital technology are playing a key role in helping them get back on their feet. In a Mastercard webinar, experts from the UN, Sweden, Malta and South America discussed what SMEs need to overcome challenges, seize opportunities and thrive

As the COVID-19 pandemic began to take hold in early 2020, countries around the world locked down one by one. Borders were closed and people were unable to enter or exit nations. Tourism has come to a halt and many places that rely heavily on domestic and international visitors have been hit hardest by the economic crisis. Businesses that sell direct to holidaymakers and those in the wider supply chain have seen their revenue streams wiped out and many well-established and well-run businesses have collapsed through no fault of their own.

Now, as countries ease restrictions and reopen borders, people are starting to feel more comfortable with the idea of ​​international travel. This represents a major opportunity for the tourism industry to capitalize on pent-up demand, with early indicators suggesting that in the aftermath of the pandemic, many tourists are willing to spend more money than ever on travel.

But how can governments help small and medium-sized enterprises (SMEs) capitalize on the return of tourism? And what role could digital play in ensuring a full, sustainable and inclusive recovery for SMEs in the tourism sector?

This was the topic of “Digital Takeoff: How Governments Can Help SMBs Make the Most of Reviving Tourism,” a Mastercard webinar hosted by the Global Government Forum last month.

The United Nations (UN) through its World Tourism Organization (UNWTO), the agency responsible for promoting responsible, sustainable and universally accessible tourism, is an organization called upon to play a key role in the recovery of the global tourism industry.

Speaking during the webinar, Natalia Bayona, Director, Innovation, Education and Investments at UNWTO, explained that tourism is a significant contributor to global GDP, and that to accelerate the economic recovery of the tourism value chain, it is imperative to help SMEs access technology and learn to use it.

Natalia Bayonne

However, in some emerging markets, Bayona said it was impossible to pay digitally or via mobile phone and this impacted a location’s competitiveness. The analysis undertaken by Mastercard Test and Learn confirms this. He revealed that digital SMBs saw a 5% increase in customer spending and a 4.5% increase in transactions compared to their non-digital counterparts during the pandemic.

Through its Digital Futures programme, UNWTO aims to help two million SMEs across the world unlock digital technologies to create jobs and build resilience in the tourism value chain over the next three years.

“Going digital is more urgent than ever because if we don’t give them access to digitalization, we can’t talk about sustainable growth. We can’t talk about inclusion, we can’t talk about diversifying our economy,” Bayona said.

Malta Digital Tourism Strategic Roadmap

Governments in some countries have been more proactive than others in driving the digitalization of domestic tourism businesses. A good example of success is Malta, which last year drew up a recovery strategy for its tourism industry.

Euchar Sultana, Information Officer at Malta’s Ministry of Tourism, said part of the country’s strategy is to focus on 13 specific challenges and one of those challenges is to understand how digitalization can help the country to provide a better quality product to tourists.

“We have planned a digital tourism strategic roadmap to 2030 and the idea here is to improve the tourist experience and introduce more technology in order to elevate the product,” Sultana explained. “We are therefore not looking here for digitalization to replace the physical experience, but rather to elevate and complement the experience of visiting the island and the aim for Malta is to be a destination with digital products leading.”

The strategy’s first priority is to help members of the Maltese tourism industry invest in digital products, and it also focuses on training and upskilling tourism workers by providing training through online platforms. . The strategy takes into account the importance of research and innovation and investment in the country’s technological and data infrastructure.

Euchar Sultane

Sultana said the key to the future success of the strategy is cross-collaboration between all the different stakeholders and engaging with those stakeholders as early as possible.

“It’s not just the public sector, it’s not just the private sector – there are also NGOs and other different stakeholders involved. So the approach we’re taking here is that we bring different stakeholders around the table and make sure that at a very early stage there’s co-design of the document, there’s co-design of the initiatives, and there is a co- -ownership of the document itself. So this document, this implementation plan, this vision, is not the vision of the Minister of Tourism or the Malta Tourism Authority, but a vision shared by the various stakeholders, which is essential to ensure the success of such a plan and digitization in the future.

Success in South America and Sweden

The interview turned to the success of a South American program aimed at enabling SMEs to innovate. The Central American Bank for Economic Integration (CABEI) – an international multilateral development finance institution – has worked with governments in the region to create a recovery program to support SMEs.

Dante Mossi, executive chairman of CABEI, said the program started with $350 million in funding and offered SMEs five-year loans with a two-year grace period during the pandemic and encouraged them to use the money to innovate. He said a number of SMEs have taken advantage of the loan scheme and started doing things differently and the success has been such that the fund has been increased to $850 million. While the program did not require financial support from governments, Mossi said conversations and collaboration with individual governments have taken place to ensure the necessary infrastructure is in place to help these businesses. to thrive.

Dante Mossi

“For example, delivery services require a good postal service. How do you send things overseas? How do you send things to other countries? And how are you paid for these services? The one area where we need help is to relax or make it easier to buy or sell across borders and also make it affordable,” Mossi said. “The world is getting smaller and smaller, so I think we have to bet on these [digital] innovations and helping SMEs reach markets that no longer fit the traditional definition of your neighborhood – it’s much bigger than that.

He added that ‘distance is dead’ and now it’s ‘possible to be small and have an outlet and be connected to the rest of the world and it doesn’t cost much’ to do so thanks to technology.

Of course, taking advantage of the short-term rebound in visitors and tourism spending is of vital importance for the immediate future of SMEs in the tourism sector, but it is also important that sustainable financial models taking into account the questions of environmental sustainability are designed to support the sector so that companies can withstand the cyclical nature of the market. This has been an area of ​​particular focus in Sweden, which launched a new strategy for sustainable tourism last fall.

“The overarching vision is to become the world’s most sustainable and attractive innovation-based destination by 2030,” explained Linda Mannerby, senior sustainability manager at Visit Sweden, a marketing company for the Swedish tourism industry owned by the Swedish state through the ministry. of Trade and Industry.

She added that a key part of the government’s strategy has been to remove barriers to allow tourism and hospitality SMEs in Sweden to thrive.

linda mannerby

“In Sweden, a study found that laws and government regulations as well as lack of access to suitable labor were the main barriers to SME growth,” Mannerby said. “To ensure progress in this area, the Swedish government will seek to implement more digital processes, share knowledge on how digital tools can be used, ensure easily accessible information and a flexible education system for this area, and probably also more incentives for small businesses. ”

Mannerby said businesses, universities, local authorities and government need to collaborate and innovate to create new opportunities for a sustainable tourism industry in Sweden.

Private public partnership

Collaboration between the public and private sectors was a recurring theme during the webinar, which covered the many ways tourism SMEs can embrace technology and digitalization to make their business more efficient, enable them to reach more people in the world and ultimately to be more profitable.

To achieve this, Sultana said one of the main things SMEs need to establish from the start is what are the main challenges and opportunities they face, and then how technology can help address and adopt them.

“Technology is the tool that enables these opportunities and enables these different types of challenges to be met,” Sultana explained. “I think one of the key things that SMEs need to focus on, especially now that we are coming out of the pandemic, is how can they become more efficient and profitable in terms of operations? And how then can technology play a role in the functioning of the company? And how can tourism SMEs improve their service, in terms of service delivery and tourist experience? These are all important aspects.

He added that one of the few bright spots to come out of the COVID-19 pandemic is that business confidence in the use of technology has increased. Sultana hoped that the accelerated pace of adoption of digital tools would continue as the global tourism industry began to recover from the pandemic and as a result, tourism SMEs would be able to bridge the digital adaptation gap. and reaping the benefits of technology adoption.

The webinar “Digital Takeoff: How Governments Can Help SMBs Make the Most of the Tourism Recovery” was hosted by Mastercard on June 27, with support from the Global Government Forum. You can watch the 75-minute webinar via our dedicated event page.

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