ESADE study: Customer co-creation processes are the main form of innovation at tourism companies
The initiation of customer co-creation processes, the establishment of links through social media, and structural investment are the main innovation trends in Spain’s tourism companies, according to State of Tourism Innovation in Spain 2017, a new study carried out by ESADE in collaboration with Deloitte and the Technological Hotel Institute. Josep Francesc Valls, Professor in the Department of Marketing at ESADE and author of the study, commented: “This report highlights co-creation – understood as involving customers in the design of tourism products and services – as the main form of innovation in 2017. In second place is social media, which is used to establish permanent relationships with tourists before, during and after their trips. And in third place, structural investments – that is, the alignment of talent and assets in order to focus on the customer.”
For the seventh year in a row, the ESADECREAPOLIS International Innovation in Tourism Centre has analysed the state of innovation in the hotel, catering, transportation, distribution, leisure, culture and entertainment industries, as well as public institutions. The sample consisted of 501 cases, selected proportionally from the various subsectors and Spain’s autonomous communities in accordance with their importance in the Spanish tourism industry.
Jorge Schoenenberger, Managing Partner for Travel, Hospitality, Leisure and Transport at Deloitte, commented: “Innovation is a powerful tool for generating added value since it affects factors such as cost savings, increased sales and improved traveller experience. The data analysed in this report reflect fundamental aspects of Spain’s very competitive tourism industry.”
Tourism industry normalises investment in innovation
“Our analysis reveals that more than 50% of tourism companies invest between 1% and 4% of their turnover in innovation. This is a normalised average compared to other sectors of the Spanish economy,” commented Prof. Valls. “The percentage of companies that invest less than 1% rose from 14.6% to 25.1% between 2012 and 2016, and much of the difference is due to companies investing in innovation for the first time.” According to the report, in less than four years the percentage of companies that innovate and want to accelerate the process has gone from 34% to 44%, while those which do not innovate and have no interest in doing so fell from 35% to 27%.
Main sources of innovation: clients and employees
According to the report, customers and employees are the main sources of innovation for tourism enterprises (scoring, on average, 3.9 and 3.8 on a 5-point scale, respectively), ahead of suppliers, distributors, the channel and the competition (which scored between 3.7 and 3.4). Trendsetters, start-ups, public institutions and universities all had lower scores (below 3.2).
The surveyed companies also affirmed that innovation is important in order to improve the technology that they offer their customers (4.2 out of 5); to win more customers (4.1); and to improve their image (4.1). The companies reported that innovation was less important for improving sustainability (3.3) and for increasing prices or reducing costs (3.7).
Tourism start-ups: the fastest at making money
Most enterprises in the tourism sector are characterised by a low level of investment and profitability in the very short term. According to the survey, 63% of projects required between €3,000 and €20,000, whereas only 8% needed more than €100,000. “Because of this, entrepreneurs tend to use their own resources and most do not rely on business angels, venture capital, participatory loans, or crowdfunding,” commented Álvaro Carrillo de Albornoz, Managing Director of the Technological Hotel Institute.
This statistic illustrates why tourism is the industry where start-ups are the fastest at entering the market and starting to earn money. The tourism industry continues to be characterised by a short average time between the birth of a business idea and market entry: 74% of the respondents needed less than a year to start making a profit and 12% needed between one and two years.
Facilities and obstacles to entrepreneurship
According to the survey, the main facilities to entrepreneurship are mentoring, training and attendance at seminars and congresses, factors cited by 70% of respondentes, followed by leadership capacity and teamwork (59%) and communication (42%). The main obstacle, cited by nearly half of respondents (46%), remains the absence of official support, followed by lack of business knowledge (27%) and fear of failure (26%).
