Tourism could be key to EU's economic re-launch

Tourism could be key to EU's economic re-launch Europe’s potential as a tourist destination could be vital in ensuring cohesion policy is a success, argues Eduard Hellvig.

By Eduard Hellvig

23 Oct 2014

The new term of the European institutions should be seen as a chance to regain the enthusiasm of society and to re-launch the economy. For the European Union, the world’s number one tourist destination, the challenges tourism and the travel industry are facing should be priorities for several reasons – from the potential of boosting growth and job creation, to intensifying competition in the fast changing global economy.

The hospitality sector represents the third largest socioeconomic activity in Europe, accounting for 10 per cent of GDP and 12 per cent of employment. It has maintained an impressive growth rate in the last decade and a half despite the effects of the economic crisis upon business and leisure demand. One in seven enterprises in the European non-financial business economy belongs to the tourism industry, employing an estimated 15 million people.

Nevertheless, Europe is far from reaching its limits as a global tourist destination, given its great potential. Globalisation and technological innovation have opened up new opportunities, and tourism can now significantly contribute to the development of the European economy and, more concretely, of the EU regions.

"Each year since 2010, there have been record levels of nights spent in tourist accommodation in the EU; this reflects the enormous potential of the hospitality industry"

But statistics reveal that there are a lot of gaps. The number of popular tourist destinations among non-residents is limited: Spain, Italy and France account for nearly half of the total nights spent by non-residents in Europe. The top 20 tourist regions are all contained in only seven member states. At the same time, more than half of the EU regions have occupancy rates of less than 50 per cent, according to Eurostat data. This shows that the EU has an enormous unexploited potential since Europe is also the favourite destination of its citizens as 85 per cent of EU residents' trips take place within its borders.

Currently, the most popular destinations are the coastal areas and regional capitals. Tourism, however, could help to integrate the peripheral regions into an enhanced cohesion policy. In order to diversify we have to pay more attention to sharing best practices, promoting eco-tourism products, improving the visibility of non-traditional and cultural destinations, overcoming seasonality through permanent innovation, boosting accessibility and facilitating transport connections.

We have the chance to channel our historical and cultural heritage into a valuable source of wealth and education. Sibiu in Romania, the first European capital of culture (2007) from one of the post-2004 EU accession countries, is a good example of this. Nicknamed 'Little Vienna', Sibiu had been awarded a three-star rating (the maximum) in the Michelin green guide, after investments had been made that highlighted its medieval charm.

It is the duty of the new commission and the parliament to support this sector so that it can play a significant role in local economic development. It is a domain consisting mostly of small and medium enterprises, therefore it is important to ease access to funds for SMEs. Tourism is a highly taxed industry, yet the reduction and harmonisation of VAT could increase quality and competitiveness. In a common internal market, tourists should enjoy uniform protection of their rights, especially when booking online.

Each year since 2010, there have been record levels of nights spent in tourist accommodation in the EU; this reflects the enormous potential of the hospitality industry. Tourism can become a key industry in the European economy, if we learn how to transform these gaps into opportunities.

 

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