Leveraging Technology for Sustainable Tourism Development

“Leveraging technology for sustainable tourism development” was the theme of the latest Digital Tourism Think Tank webinar in partnership with 世界银行 . DTTT Founder and CEO, Nicholas Hall , set the scene with a keynote on some of the main observations when mapping technology in the tourism value chain.

The panel, comprising Sergio Guerreiro , Senior Director at Turismo de Portugal , and Samuel Rutledge , General Manager at Kovena , an embedded payment company specialised in the hotel industry in emerging markets, then shared their perspectives on how the sector is dealing with the newest technologies in the market.

The first presentation addressed the main industry challenges and barriers to using technology to support destinations and businesses' sustainable development. Nicholas Hall shared some insights on leveraging data from different angles, the needed digital skills to embrace technology innovation, and policy implications.

One aspect that was common to all those points was the influence of the pandemic on destination transformation since 2020. Covid impacted the entire industry and changed consumption patterns. At the same time, it helped to speed up the digitalisation of destinations. Sergio Guerreiro shared that “it was also a good time to test new tech solutions because the atmosphere allowed organisations to take more risks”. We all know that difficult times can bring out the greatest innovations.

Samuel Rutledge introduced Kovena , one solution that demonstrates the relevance of technology for the sustainable development of hotels. According to Sam, one of the big issues today in the hotel industry is no-shows. In Seychelles, no-shows can reach up to 20% of all bookings, which is quite significant. In the case of hotels with a larger structure, this might be a minor issue but for the others who don’t have embedded payment systems, the impact may be bigger. When guests cancel their trip, usually they don’t reimburse these hotels. Sam believes “the pandemic changed the whole world and how banks and online payments platforms view the travel sector and how they analyse the risk”.?

Nicholas Hall added that these challenges put SMEs in a weak position because it’s not just about the payment stage. SMEs need to have a stronger digital presence - to make them fully digital - across the entire value chain.

Unfortunately, that isn’t an easy task because the actual distribution model in the industry is also not fair for them and makes them less competitive. On one side, they can sell their product and experiences anywhere but, on the other, they can’t negotiate rates and other relevant conditions. Moreover, the fees and commissions are high and threaten their profitability. Lastly, many SMEs ended up being extremely dependent on bookings that come through these channels.

Given all these barriers and challenges to the use of technology in the industry, what should NTOs and DMOs do to address them? The panel discussion resulted in 6 main points.

1. Reinforcing community links

Fogo Island Inn in Canada was the case study Nicholas Hall highlighted when mentioning the importance of integrating the community into the sustainable development of businesses and destinations. This is a social entity that sources everything from the local community - from food to textiles. What differentiates this business is its focus on people and community and also the stories they can share. Ultimately, anyone would like to book directly with them because that is also part of the experience.

2. Enabling stronger coordination in the industry

During the expert interviews, cooperation was one of the most highlighted aspects as a barrier to technological innovation. In Sergio Guerreiro ’s perspective, this is one area that should become a priority for any DMO - which is no longer just responsible for marketing. He added that the lack of local cooperation we can see in almost every destination is one of the reasons why there are big players in the industry still dominating the rules.

3. Providing training opportunities?

Ultimately training is a great way to speed up digitalisation processes. One of the barriers was the lack of knowledge and the difficulty the staff has to make choices when investing in new technologies. So the key is to provide tourism professionals with the right digital skills to assure they make good investments.

Samuel Rutledge shared an interesting case from the Pacific Islands where half of the hotels still don’t accept online payments. The main reason is just that they don’t know there are tech solutions cheaper and easy to implement.

In the same sense, one of the most discussed aspects today in the industry is staffing resources. The pandemic pushed a lot of workers from tourism to other sectors and many won’t come back. So we see, on one hand, demand returning to pre-covid figures but, on the other, a clear shortage of people working in tourism. This might raise the question: are we on the verge of competition for talent in the sector?

4. Creating innovation ecosystems?

Considering that the industry evolves quickly, it is always tough to keep up with every new challenge. To be able to provide solutions consistently, ecosystems that join academia, NTOs and DMOs, businesses and the community might be a good solution, according to Sergio Guerreiro . Different perspectives are important to come up with those solutions.

“We need a bigger and more flexible ecosystem that allows understanding which will be the next big thing in tourism.” Sergio Guerreiro

5. Integrating new technologies

Blockchain was one of the technology examples highlighted in the panel. Nicholas Hall believes that it brings a lot of potentials to solve industry challenges. Blockchain can create more equity because it can allow direct transactions between the end consumer and the provider, without any intermediary. This is one major issue for SMEs in tourism because the dominance of those big players impacts directly their profitability.

Winding Tree is one good example to show how can blockchain contributes to sustainable development in the case of businesses. The same happens in the arts and culture areas with the eXplorins example. Nevertheless, we all need to be cautious with these projects because it is critical to understand what’s the real ROI before making significant investments. And this takes us to the next topic - which refers to the importance of prototyping and testing any solution collaboratively.?

6. Bringing design thinking to the table

Cooperation between the industry will be key to leveraging technology for sustainable tourism development. Design thinking can be seen as a great tool to enable that cooperation while gathering all stakeholders to find innovative and creative solutions for their challenges. It can be used to take more advantage of data collected individually or to overcome the difficulty in understanding which technology will help solve or minimise a specific problem.

We work in a complex sector, as Jessie F. McComb (Senior Tourism Development Specialist at the 世界银行 ), the webinar moderator, said when concluding the webinar, and the democracy of digital makes it even more challenging. So we expect public organisations, like NTOs and DMOs, to be able to work locally on reinforcing collaboration and creating conditions to take full advantage of technology for sustainable development.

Turismo de Portugal is a good example to follow in the way they encourage businesses to gain more skills and become more innovative with the adoption of technologies - by offering room to prototype and test. The same applies to DMOs - Turismo de Portugal is helping them to reinvent themselves and to become able to bring stakeholders together.

Kovena is also making a positive contribution to sustainable development but at a granular level, unlike Turismo de Portugal whose work is based on macro aspects.

To sum up, design thinking could be an interesting tool for NTOs and DMOs to achieve a sustainable development path with the help of technology. Given all challenges discussed, the best way to look at the future is to assume that together we can find better solutions.