As summer is approaching in the northern hemisphere, the tourism sector is about to go into overdrive once again. For smaller countries, the impact that tourism has on the economy really cannot be overstated. There are many small island nations that would not survive without it.
Tourism is, however, a very fragmented sector of the economy. While some locations specialise in ultra high-end standards, there are others that operate at the bargain level. While a location might have appeal for people in all parts of the social and cost spectrum, it is very difficult for a location to upgrade through the price brackets.
One way of doing this is in adding different sectoral marketing to a destination’s appeal. For example, adding business clients can help to force service providers upwards in their offerings.
We spoke to Mauro Gasan, founder and CEO of two tourism related businesses on the European island nation of Malta, Petite Events and IDoKnot. He explains, “It is vital that businesses separate themselves from the crowd in their marketplace. My firms offer high levels of creativity to our clients to create unique events, but other companies could provide very different things.”
As Gasan rightly pointed out, not every advantage can be used by every business, which makes it important to be selective. However in smaller nations, access to capital is often limited, which can make expansion and upgrading difficult or impossible for a small business. For the family owned restaurant, guest house or hotel, this can put a permanent limit on their progress, pricing and earnings.
This also means that many operators are at the mercy of the economy, or more specifically, the economy from which most of their visitors come from. If, for example, a location relies heavily on American visitors and the US economy has a major setback, it is inevitable that other it will feel a pinch – the only real question is just how hard that pinch will be.
In the case of Mr Gasan’s Malta, the European economic crisis was actually helpful. Malta is guaranteed sunshine throughout most of the year and is generally priced more cheaply than other destinations. This meant that when the financial crisis hit, people still wanted to travel and get some sunshine, but with less financial confidence, they chose to visit a lower priced location.
Perhaps the main problem with this positioning is that there is always somewhere cheaper. In Europe’s case, the economic crisis has left both Greece and Cyprus in precarious financial positions which means that they offer better value for money than before and make tempting prospects for holidaymakers.