Challenges of the tourism, hospitality and experience cluster in foresight analyses and strategies before the COVID-19 crisis




Heikkinen Vesa, Kaivo-oja Jari

PublisherHaaga Helia

Helsinki

2022

Haaga Helia Julkaisut

8/2022

1

22

978-952-7474-19-8

2342-2939

https://julkaisut.haaga-helia.fi/en/challenges-of-the-tourism-hospitality-and-experience-cluster-in-foresight-analyses-and-strategies-before-the-covid-19-crisis/(external)



This case study program of the Finnish THE cluster indicates that the differences between the Finnish tourism strategy, which is composed by the Finnish authorities, by business strategies by international companies and the Ministry of Economic Affairs and Employment, is the influential driving force as such. It has a national, political and economic role to counsel tourism policy, strategic plans and also guide scenario building processes. The tradition is the same all over the world, where the state is in charge of strategic foresight. Public-private partnership is one key element of tourism foresight and strategy planning in Finland.

The tourism industry in Finland is more operationally oriented, interactive and has a short-run perspective. The strategic goals are aiming for active business and turnover growth from key international markets. The companies´ strategic foresight thinking is concerning the competitors, partners, competitivity and competition edges. This is not a surprising finding but indicates less emphasis on strategic and visionary planning in the tourism business. Tourism marketing organisations (Visit Finland, the authorities of Lapland) are also aiming at new tourism and hospitality markets, innovative products and services.

The case study program indicates how foresight and risk thinking is simplified during times when business is steadily growing. It is easy to see growth from new customer segments and new business areas, if THE organisations do not see any weak signals or wild cards to change current strategy and offerings.

Finnish national tourism strategy is very common and obvious. It is a combination of European, Scandinavian national and regional tourism policies, science, innovation and technology policy, internationalisation strategies of “born global” enterprises, elements of the functionality of international markets and promotion of competition and consumer policy. The strategy is a mix of employment and ecologic issues. It is also a strategic combo of balanced regional development and co-operation areas of the regional councils.

The MEAE should be more responsible for the differentiation of regional and seasonal tourism. It should present a variety of different tourism futures and offer some visionary landscapes, but the strategic map is very business positive, linear and realistic. Finnish tourism strategy is very keen on logistic physical infrastructure (airports, roads, railways, ferries and other physical mobility infrastructures), but not the service infrastructure. It is not taking into account SMEs as service providers, which have no capital for huge investments.

Visit Finland´s strategy and the tourism industry´s strategies are more operational and tactic than strategic and visionary. It is very important to depict the development of Northern hospitality, food and experience services. Our study shows how the business strategies and strategy of state-owned Finavia are to develop unique customer and employee experiences. Finnair, NoHo and Scandic Hotels are describing, especially for investors, venture capitalists and asset shareholders, how systematic experience production add total value, growth strategies and tactics and growth opportunities.

Finnish tourism strategies have been pursuing the growth of tourism volume but not the growth of revenues. Visit Finland has understood the meaning of profitable guests, quality and revenue management and luxury tourism. Finnair and Scandic Hotels are also aiming at premiumisation. They want to separate themselves with unique brands, service quality and safety. NoHo Partners has expanded its concept portfolio from volume business (fast food industry) towards mass-tailored services (fine dining). Their strategic foresight is aggressive expanding on all business areas of the THE cluster.

All tourism strategies are development oriented and competence oriented. In these tourism strategies, dynamic capabilities are highly important. In many countries, the tourism organisations do not invest in the companies and employees, but in Finland, it is a key value-added factor and a competitive edge. The Finnish organisations are investing a lot in staff training and skilled personnel.

Beyond Finnish foresight thinking is a belief in continuous development and innovation. The travel and hospitality development and market analysis are very consumer, customer and passenger oriented. Social and technological innovations are not discussed so much in Finland. Digitalisation and Service-Dominant Logic (SDL) are seen as major trends. Finavia´s development programs start typically from customer analysis and passenger journeys. Finnair and Scandic Hotels are studying customer needs and traveller experiences. The organisations are producing customer insights before they start service, hospitality, food and experience design.

The Finnish tourism and hospitality strategies are also very general, immaterial, qualitative and interactive. The strategic development areas are described from the brand, destination and concept management points of view and measures are also more qualitative characterisations and marketing stories than competitive business strategies. Also the tourism scenarios have a strong traditional and narrative emphasis.

Finnair´s, Finavia´s, Lapland´s and Scandic Hotels´ strategies are based on existing monitoring of traveller data and forecasting projections on the development of tourists and passengers. They believe, a little bit blindly, that the international target markets are expected to grow at an annual rate of around 4 % in overnight stays and around 5 % in tourism exports. The 5 % annual growth rate in inbound demand means doubling the demand growth rate. It is possible to reach this target, as evidenced by the growth achieved during the years 2017–2019. Achieving the ambitious target, the strategies have consisted of ambitious plans and the core vision of sustainable success.

All strategies believe in the potential for growth in the tourism industry and its exports and growth in domestic tourism demand. This is why the Finnish strategy is justifying to prioritise support to the internationalisation of tourism enterprises. The annual growth in demand for domestic tourism is projected to be around 1 %, with overnight stays expected to grow by an annual rate of around 2 %. The general objective of the development of domestic tourism is to reduce the gap between domestic and inbound travel accounts. The growth targets for domestic tourism are moderate, although the growing popularity of staycations and land transport due to climate concerns may increase the popularity of domestic tourism. In Finland, the phenomenon can already be seen as growth in domestic rail travel. Domestic tourism can be promoted through product development and marketing.

Finnish companies’ tourism strategies were just updated when the COVID-19 crisis started.
With ongoing stay-at-home orders and mandated closures across most of the country, hotel and restaurant sales collapsed. The coronavirus crisis impacted heavily on business and companies had to react immediately by starting adjustment measures and preparing for the changed market conditions.

The COVID-19 crisis destroyed also most of the tourism strategy planning theories and foresight analyses performed before the crisis. The indicators for the assessment of business sustainability, which was developed regionally and nationally in Finland as well as internationally, were unsuccessful. Baseline data on the current situation analysis at the national and international level were available but we did not believe them.

The COVID-19 crisis shows, how static and positive strategies were in the THE cluster. They were papers and plans of the present business environment and description of linear business indicators and measurements. So-called “out-of-box” -thinking was not playing a major role and readiness to meet wild cards was on a low level.

This case study program indicates that the organisations are using historical data for present conventional indicators and creating the illusion of certainty with data-based forecasting. Tourism and hospitality organisations need holistic foresight and risk thinking and uncertainty thinking and new weak signal indicators and continuity of monitoring. Indicators – quantitative and qualitative alike – will be supplemented particularly as regards sustainable tourism, digitalisation of tourism, and visitor numbers, and economic impacts of professionally managed by the Ministry of Economic Affairs and Employment and other key players. Small companies do not have resources for this kind of monitoring tools in Finland.

The case study program clearly indicates, how the strategies are co-created combinations of proactive competition activities and interactive activities. We need more strategy and foresight research on the real impacts of business strategies for tourism and hospitality companies and Finnish society. What are the not linear development trends and what are predictable, more linear phenomena?

Many strategies want sustainable growth, but the sustainability concept is depicted very weakly and on a meta-level for example as stronger cooperation between tourism industries. The most important and fundamental sustainability factor, ecologic sustainability, is very poorly described. Finnair tries to describe how they are cutting their emissions, but the communal local tourism organisations have no transparent monitoring tools and quantitative indicators on how they are increasing their eco-efficiency and improving the real functioning of the circular economy.

This study indicates how Finnish tourism organisations are monitoring the development of tourism demand and employment. They are justified at both national and regional levels, as tourism has lots of multiplier effects on other sectors of industries and service economy. For public authorities is more important to increase employment and job creation than increased turnover.

The national strategy is depending on cluster thinking and is depending indirectly and directly on other industries as transportation, IT services, construction, real estate maintenance and the security industry THE strategies of organisations, as figure two, indicate the linear thinking. The operational environment is/was clear and non-complex. Especially the COVID-19 has shown that the strategic landscape is complex or even hypercyclic. The strategies of case organisations were missing the visionary thinking and foresight. The tourism strategies in Finland did not consider non linearities and discontinuities.

The foresight model has to be developed and increase is needed in risk analysis and foresight thinking. One obvious possibility is to aim to decrease the space of bounded rationality for more determined foresight activities (see Figure 6).

There is a vital need to connect foresight analyses to the strategy processes, which were discussed in the theoretical introduction (Mintzberg & Quinn 1998, xi) of this article. If this is not done, the space of bounded rationality stays large and leads to larger business failures than in the case this is done. In the midst of COVID-19, the practices of science and management are obviously not at all the same as we have always understood them. Rather than being able to make “evidence-based decisions,” we find that many crucial facts are highly uncertain at best, values are in violent dispute, stakes run to hundreds of billions of dollars and hundreds of thousands of lives, and the daily death toll makes even personal decisions vitally urgent. It seems that so called “normal” science is totally inadequate to cope with this complexity, and needs to be supplemented with a broadened awareness of solutions and problems alike. The diffusion of uncertain facts into society turns all of us into an “extended peer community.” (see e.g. Ravetz, 2020). In this kind complex situation, discussions about weak signals and wild cards are highly relevant.

In the context of global climate change and now COVID-19, there has been much talk of the new normal. That is, the situation we all need to get used to when things settle in and we get accustomed to what has changed. But the new normal is more or less an exercise in nostalgia—for a time that never was. Now we can note that the COVID-19 crisis has momentarily opened up a new open window and at the moment.

Future trends do not seem like a self-evident continuation of the past, but instead many new tourism and hospitality business areas are now open to us as uncertain and possible, partly desirable too. This new unique situation is very challenging for tourism research and especially for future oriented tourism research. The health safety and service quality of futures are now big issues for the tourism and hospitality industries. Their importance will probably increase in the strategies and visions of THE industry.



Last updated on 2024-26-11 at 13:51