The process of economic globalisation is unstoppable. Advances in information and communications technology are leading to the virtual integration of mankind. Liberalisation at borders and deregulation within countries are increasing productivity and prosperity. Households in emerging economies are, for the first time, able to put aside a travel budget, as incomes in these countries close the gap with the industrialised world. Also, the increasing division of labour on an international scale is boosting the volume of business travel.

The main objective of this chapter is to examine how the globalisation of tourism is affecting the role of Small and Medium-Sized Enterprises (SMEs) in the industry’s supply and distribution value chains and networks. It examines how SMEs can best operate in a global market place, even though their theatre of activities is local, how small companies can best compete with both local suppliers and with major international tourism companies and multi-national enterprises (MNEs), and how recent developments in technology, especially in the area of Internet-based information and reservations systems, can best be embraced by SMEs. The report draws on previous work by the OECD and on a series of case studies carried out on this subject by a number of member States.

In 2005-06, tourism generated about AUD 37.7 billion (approximately 3.9% of Australia’s total GDP), an increase of 5.5% on the previous year. However, since the Australian economy as a whole grew at a faster rate, this resulted in a decrease in tourism’s share of GDP from 4.0% in 2004-05 to 3.9% in 2005-06. In 2005-06, the tourism industry employed around 464 500 people; approximately 4.6% of total employment. Domestic tourism represents approximately three quarters of all tourism consumption. Overall domestic tourism expenditure grew by 5.7% in 2006. The number of domestic trips also increased by 4.0% and the number of domestic visitor nights by 3.6%. In 2006, there were 5.5 million foreign visitor arrivals, an increase of 0.6% on 2005 (Table 3.1). International visitors spent AUD 14.0 billion while in Australia, up 14.7% (or by AUD 1.8 billion). Key foreign markets for Australia in 2006 were New Zealand (1.1 million, down 2.1% on 2005), the UK (734 000 arrivals, up 3.6%), Japan (651 000 arrivals, down 5.0%), the US (456 000 arrivals, up 2.2%), and China (309 000 arrivals, up 8.3%).

According to Tourism Satellite Accounting methods, the direct value-added effects of tourism in 2006 were of the order of EUR 16.5 billion, 6.4% of GDP. In 2006, 168 000 people (2005: 164 100) were employed in hotels, restaurants and similar establishments, 5.1% of total national employment. Of the total, around 60% were females. In 2006, the number of international tourist arrivals was 20.3 million, a 1.5% rise on 2005, while domestic arrivals totalled 9.87 million, 5.2% up on 2005. Overnight stays amounted to 119.4 million, just 0.1% up on 2005. Tourism receipts from foreign visitors in 2006 were EUR 13.3 billion (excl. fare receipts), 2.7% up on the previous year. Tourism accounts for more than one third (Table 3.7) of Austria’s total exports of services. (Despite an 3.0% rise in Austrians’ tourism expenditure abroad in 2006, Austria maintains a strong positive balance on the tourism account of EUR 5.8 billion.) Although Austria’s leading origin market, Germany, has been in decline recently, smaller markets, particularly those in Central and Eastern Europe, have grown.

Since 2004, tourism is under the responsibility of the different regions (Walloon region, Flemish region and Brussels-Capital Region). There is no tourism policy undertaken at federal level. This country profile presents the current policies developed in the Walloon and Flemish regions. In 2006, the tourism sector accounted for EUR 8 billion in Belgium. During the same period, Belgium received about 7 million international arrivals, of which 52% in the Flanders Region, 32% in the Walloon Region and 16% in the Brussels Region (Table 3.8). In the Walloon Region, tourism represents approximately 4.8% of GDP (2003).

Tourism (domestic and international) contributes just over 2% to Canada’s GDP and accounts for 3.8% of national employment (Table 3.16). The sector’s contribution to both these measures has remained broadly stable over the past five years. In 2006, Canada’s most important international market, the United States, which accounts for 86% of all inbound visitors, is in decline. Overall arrivals from the United States declined by 8.8% in 2006, falling below 30 million for the first time since record keeping started in 1972. The first half of 2007 has also shown decreases in arrivals. A high proportion of international visitors (50%) come to Canada for leisure purposes (including outdoor activities and sports), followed by visiting friends and relatives (18%), with business (including convention and employment) in third place (10%).

According to tourism satellite account (TSA) methodology, the contribution of the tourism industry to the Czech Republic’s GDP in 2005 was 3.1% (Table 3.20), with hotels and restaurants accounting for about 1.8% of GDP. Employment in the tourism sector (hotels and restaurants) reached 3.8% of total employment in the same year. Foreign currency revenues amounted to EUR 3 760 million in 2005 and their contribution to GDP was 3.8% and to exports 5.9%. Because of the rapid rate of growth in the national economy, however, and the stagnation of the tourism sector, tourism’s share of foreign currency revenues is declining. The level of nominal wages in this sector is well below the average of the Czech Republic. The total number of enterprises registered in this sector was 50 233 in 2005.

Tourism accounts for 2.8% of Danish GDP and 3.6% of total employment. The total tourism consumption in Denmark was DKK 64 billion in 2005. In 2004, there were 9 936 Danish enterprises/firms in the tourism sector, employing almost 29 000 full time employees. More than 50% of these enterprises/firms had no employees (Table 3.23). In 2006, there were 22.14 million domestic bed nights and 22.25 million foreign bed nights registered in Denmark, almost exactly a 50/50 split. Recent trends are summarised in Table 3.21. The recent fall in bed nights is largely due to a reduction in the key German market.

Domestic tourists account for nearly 73% of all overnights in Finland, although the share of international travellers is increasing. In 2006, the number of foreign visitors to Finland increased by over 6% to reach 5.3 million. The consumption of international visitors has increased by 12.5% between 2004 and 2006, and represents 26% of total tourism consumption (which was EUR 9.6 billion in 2005). Finland provides Tourism Satellite Account data on an annual basis and has also developed a Regional Tourism Satellite Account system. Tourism accounted for 2.4% of GDP in 2005 (Table 3.28). At the end of that year, there were 22 400 tourism characteristic enterprises, employing some 130 000 persons full- or part-time. In 2005, tourism employment represented 7.2% of total employment. Tourism receipts were EUR 1 891 million, according to preliminary information for 2006.

Tourism is an important sector of the French economy. It accounts for 6.3% of GDP and generates some two million direct and indirect jobs in 200 000 companies, most of which are small or medium-sized. In recent years France, which is the world leader in the number of foreign tourist arrivals, has experienced exceptional growth, in particular up until 2001, making tourism activity the front ranking sector of the national economy in terms of the foreign currency inflow generated.

According to TSA calculations, the direct added value effects of tourism in 2000 were about EUR 57.5 billion, 3.2% of GDP. Up to 2.8 million jobs in Germany depend directly or indirectly on tourism. There are some 52 900 accommodation facilities with more than 2.5 million beds. Tourism in Germany employs some 776 000 people, of which 64% are female. The sector (hotels and restaurants only) employs some 2.12% of the national labour force (Table 3.35)

According to recent assessments the contribution of tourism (direct and indirect impact) to the Greek economy represents 18.2% of GDP. The “hotels and restaurants” sector represents half of tourism activities and directly contributes 10.4% to GDP. In 2005, the average tourist expenditure per capita was USD 1.073, placing Greece in 10th position worldwide. Taking into account international tourist receipts, which in 2005 totalled EUR 11 billion, this is the equivalent of EUR 1 200 for each resident, placing Greece in fifth position in world tourism by this measure.

The direct contribution of tourism to GDP is 5%, but rises to 8.5% when the indirect effects are taken into account. Some 75 400 enterprises were registered at the end of 2005 in tourism sector (Table 3.43), of which 72% were sole entrepreneurs and the remaining 28% were incorporated. The number of employees in the field of tourism is 398 000, 8.9% of the total number of employees in the country. However, estimation shows that indirectly – taking into consideration the Tourism related industry – some 490 000 are employed in tourism, 12.5% of total employment.

International tourism in Iceland is one of the major contributors to the economy, accounting for 3.9% of GDP in 2001, 4.7% in 2002 and 5.1% in 2003, and reaching 6.3% in 2006. The sector also accounted for 12.6% of export earnings in 2006, up from 12.3% in 2005 (Table 3.46). International tourist receipts were EUR 500 million in 2006. Growth has been erratic since 2001, with arrivals increasing by 21% in the five years to 2005 and international tourism receipts by 43%.

In 2006, total foreign and domestic tourism revenue of EUR 6.09 billion generated an overall GNP impact of EUR 5.63 billion after applying multiplier effects (direct, indirect, induced and “Government interacting”). As a result total tourism revenue accounted for 3.7% of GNP. The estimated total number of people employed in the Irish tourism and hospitality industry in 2006 was 249 338 – an increase of 1.4% on the numbers employed in 2005. Of this number, almost 203 000 are year-round employees. Numbers employed in tourism related services in each year from 2004-06 are outlined in Table 3.49.

The vital role that tourism plays in the Italian economy is demonstrated by the foreign exchange registered by the Italian Foreign Exchange Office (UIC) and the Italian National Bank. This is expected to reach an all-time record of EUR 30 billion in 2006. The growth in foreign earnings announced by UIC is even greater than that for the international market and considerably larger than that for Western Europe.

Tourism in Japan is one of the biggest sectors of the economy. During fiscal 2005, it is estimated that JPY 24.4 trillion was spent on travel in Japan (including JPY 1.6 trillion spent by visitors to Japan from overseas). It is estimated that the Japanese spent a total of JPY 27.8 trillion (excluding the JPY 1.6 trillion spent by visitors to Japan from overseas) on travel during the year.

Total tourism revenues in 2006 reached USD 5.3 billion, a decrease of 8.6% over the previous year. According to the Tourism Satellite Account, in 2004 the total value added by tourism was KRW17 606 billion, representing 2.26% of GDP in Korea. The total number of tourism employees is 852 471, or 5.04% of the total number of employees in Korea (Table 3.60). In 2006, the number of foreign tourist arrivals increased by 2.2% on 2005, to reach 6.155 million, mostly from other Asian countries. Japan is Korea’s dominant market, accounting for 38% of all international arrivals in 2006. The 2006 increase is smaller than in 2004, when arrivals grew by 22.4%, and in 2005 when the increase was 3.5%, but indicates nonetheless a continuation of an upward trend. Since 2003, the Korean Wave phenomenon (Box 3.13) had a strong effect on Korea’s tourism industry. In 2005, this phenomenon produced good results for various marketing and public relation activities and contributed to the achievement of a record 6 million arrivals.

In 2006, there were approximately 2.6 million overnight stays by visitors to Luxembourg. A report by the World Travel and Tourism Council (WTTC) for 2006 estimated the direct and indirect economic importance of the tourism industry at 2.9% of GDP (EUR 0.8 billion) and employment in tourism at 7 000 employees, or 3.9% of the total employed labour force. In 2006, there were 284 accommodation establishments. Table 3.62 summarises the volume of tourism in Luxembourg in terms of arrivals and total overnight stays. While arrivals increased by 3.3% between 2002 and 2006, there was a decline of 4.1% in total overnight stays in the same period. The main markets for Luxembourg are the Netherlands, Belgium, Germany and France.

According to the Tourism Satellite Account for 2005, tourism accounted for the 7.7% of GNP, sustaining about two million jobs. In that same year, the share of domestic tourism consumption was 81.3% of final consumption, with a Gross Value Added of USD 52 878 million. International Tourism Receipts in 2006 were USD 12 177 million or 53% of the value of services exports. Tourist arrivals (excluding day excursionists) totalled 21.4 million in 2006, some 8.6% more than in 2002, but 2.6% down on 2005. The dominant market for Mexico is the USA, which accounted for 41% of all overnight visitors in 2006.

According to the TSA in 2006, the added value of tourism was EUR 13.6 billion, or 2.9% of GDP (Table 3.72). In 2002, TSA data showed that there were some 395 000 employees in the tourism sector, 4.1% of the employed labour force at the time. In 2006, 10.7 million international visitors arrived in the Netherlands, an increase of 7% on 2005. The average length of stay has decreased a little, while the number of overnight stays grew by 6% to 26.9 million. Domestic tourism in 2006 accounted for 17.8 million domestic holiday trips, 2.9% up from 17.3 million in 2005. There has been a steady rise in the number of tourism establishments since 2002 in hotels, camp sites and holiday bungalows, although the number of ANVR travel agencies (Dutch Association of Travel Agents and Tour Operators) has declined while tour operator numbers have stagnated.

International tourism makes a major contribution to the New Zealand economy, contributing 18.7% of New Zealand’s total export earnings. International tourism receipts reached NZD 8.1 billion in the year ended March 2005 and is forecast to increase by 6.5% per year to 2012, with international visitor arrivals rising by 4% per year. Tourism growth has implications for the physical infrastructure, investment intentions and the skills and talents required of the workforce. All of these need to be of sufficient quality and quantity to support the sector, particularly in peak periods.

Tourism accounts for 3.1% of GNP and 6.8% of total employment (Table 3.80). Compared to the previous year, tourism employment in 2006 showed a growth of 7% on the previous year. Total tourism consumption in Norway was NOK 87 billion in 2005, an increase from the previous year of 5%. Domestic tourists consume NOK 43 billion, foreign tourists NOK 27 billion and the business/convention market NOK 17 billion. In 2006, Norwegians took 17.3 million vacation trips, an increase of 4% on 2005. Domestic travel stayed at the same level as the year before, and thus it was holidays abroad that produced the growth (of 12%). In 2006, 69% of Norwegians’ holiday trips were domestic. In the period 2002-06, the number of holidays spent abroad rose by 27%, while domestic holidays fell by 7%.

The share of tourism in GDP in 2006 was 6.1%. Foreign tourists’ expenditure in Poland in 2006 was estimated at PLN 22.4 billion while domestic tourism expenditure was estimated at PLN 18.9 billion. Expenditure by Poles abroad totalled PLN 6.8 billion, business trips amounted to PLN 13.9 billion, and public expenditures on tourism were estimated at PLN 2.7 billion. The value of the total tourism economy was estimated at PLN 64.7 billion. In 2006, tourism exports were valued at PLN 22.4 billion, 5.2% of the total value of Polish goods and services exports.

According to the Portuguese Tourism Satellite Account (PTSA), tourism contributed 4.6% to GDP in 2004, and 4.6% of gross value added. Tourism characteristic activities represented around 88.8 % of that value. Tourism’s share of domestic production in that year was 4.2%, while internal tourism consumption represented 9.3% of GDP or around 50% of this aggregate. The PTSA estimates that employment in tourism-characteristic industries represented around 7.8% of total employment in 2004 (or 8% if full-time equivalent jobs are counted). The activities contributing most to employment in the sector in terms of FTE are restaurants (with 54.5% of total FTE in the TSA characteristic activities), hotels and similar establishments (15.3%) and road passenger transport (9.8%).

The share of international tourism receipts in Slovakia’s GDP was 2.7% in 2006 and 2.6% in 2005 (Table 3.93). International tourism receipts were EUR 1 207.7 million in 2006, an increase of 24.2% on 2005. International tourism expenditures reached EUR 841.6 million in 2006 compared with EUR 679.8 million in 2005).

Tourism is one of the mainstays of the Spanish economy. It accounts for around 11% of GDP and employment, and contributes substantially to offsetting the trade deficit. With 58.5 million foreign tourists in 2006 (4.5% more than in 2005) and the tourism receipts of close to EUR 40.7 million (5.6% more than in 2005), Spain has consolidated its position as the second-largest destination in the world in terms of tourist arrivals and receipts. Over 1.7 million people work in Spain’s tourism sector, the majority (67%) in the hotel sector.

In Sweden, tourism is gradually becoming more recognised as an important driver for the creation of new jobs, new and growing enterprises and stronger regional development. The now 12-year time series of the Swedish Tourism Satellite Account (TSA) has clearly shown the huge impact of tourism on the economy. In 2006, tourism accounted for almost 3% of GDP. The number of jobs in tourism over this period has increased by more than 40% (employment growth in the economy as a whole rose by less than 10% in the same period). Foreign tourists’ expenditure in Sweden (exports) is now bigger than the export revenue from cars. In 2006 alone, tourism created 16 500 new jobs. International overnight stays rose by 12% between 2002 and 2006, and the increase in receipts between 2002 and 2006 was 46%.

Travel and tourism are among Switzerland’s most important economic activities. Tourism is a major industry in terms of job creation. In 2006, the sector accounted for 6.2% of GDP, generating 8.4% of total employment. Tourism also has important positive spillovers for the national and local economy. It encourages local governments, especially in mountainous areas, to improve infrastructure such as roads, communications services and public transport networks with the help of federal support. There has been a decline in Tourism related employment in Switzerland (hotels and restaurants) of 11.4% in the period 2001-05 (Table 3.105).

In 2004, tourism contributed some 5.3% to Turkish GDP, and accounted for 66% of the value of services exports and 24% of the value of goods exports. In all three measures, the relative importance of tourism declined in the period 2002-04. International arrivals in 2006 were, at 19.8 million, 6.2% down on 2005 (which had been a record year, recording 21.1 million arrivals, 20.6% above the level recorded in 2004). In 2006, 59% of foreign visitors came from OECD countries (60.3% in 2005), with 5.6 million or 28.3% coming from Eastern Europe. The leading origin market for Turkey in 2006 was Germany, which contributed 19% of total arrivals, followed by the Russian Federation with 9.4% and the UK with 8.5%.

In 2005, the UK tourism industry was estimated to have generated GBP 85 billion for the UK economy, with 80% coming from the domestic tourism market. 2003 data suggest that tourism contributes 3.3% to national gross value added. In 2006, overseas residents made an estimated 32 million visits to the UK, generating expenditure of approximately GBP 15 billion. In 2004, there were 1.4 million people directly employed in tourism (44% in restaurants, bars and canteens and 16% in tourist accommodation) with more employed indirectly, equal to 5% of all employment in the UK. In 2004 also, there were an estimated 180 000 businesses in tourism industries.

United States’ travel and tourism industries are major contributors to US GDP, accounting for 2.6% of value-added in the US economy (Table 3.116). In a USD 13 trillion economy, travel and tourism are of paramount importance. The industry contributed more to the economy than the insurance industry or than public utilities, and more than twice as much as either agriculture, the automotive or the oil and gas industries. Travel and Tourism related exports now account for 26% of all US services exports and 7% of all goods and services exports.

In 2006, the tourism industry accounted for 4.8% of Romanian GDP, taking into account the direct and indirect impact of the sector on the economy. In the same year, 5.8% of the workforce at national level was employed in tourism (Table 3.119). Visitor arrivals, including day excursionists, rose by 26% in the period 2002-06, while the number of stay-over tourists rose in the same period by 38%. European markets dominate tourism to Romania, providing 82% of all visitors in 2005, followed by the Americas with 8.5% and Asia with 8.4%. The main overseas origins for Romania are Germany, Italy and France, although no one country accounts for more than 14% of tourist arrivals.

In 2006, almost 8.4 million foreign nationals visited South Africa. This was easily the highest number of arrivals South Africa has ever experienced, and it represented a 13.9% increase over the previous year (2005). The global average growth was 4.5% over this period. Tourism has been recognised at the highest possible level for its significant impact on the economy. The industry’s contribution to the GDP has increased from 4.6% in 1993 to 8.3% in 2006. South Africa is now looking to increase its GDP contribution to 12% by 2014. Tourism brings in over ZAR 66 billion (South African Rand) per annum to the economy and contributes over half a million jobs.