Technology and sustainable tourismDoes digital capacity of tourism SMEs impact

the sustainability of Icelandic tourism?

Sigríður Ólöf Kristjánsdóttir

Project Manager

Researcherbackground

Project Manager Internet Marketing Travel Agency and

tour operator M.S. Leadership &

Management B.S. Business Diploma Hotel

Management IHTTI

Introduction

Interest in tourism andtechnology

SME support Real situation Support projects Few Icelandic studies Can serve as basis for

measuring change

Research Question

Do Icelandic tourism enterprises have the digital capabilities necessary to reach the enlightened tourist?

HypothesisHypothesis 1: A digital divide exists between tourism businesses in Iceland and their main target group of „the enlightened traveler“

Hypothesis 2: Enterprises with low and very low technological capabilities miss the opportunities offered by the digital economy as the enlightened traveler can not book services directly from their company websites. The tourist then seeks the services of larger intermediaries such as large booking websites or online travel agencies. This leads to high marketing and sales cost for small and medium size enterprises.

Hypothesis 3: The main driver for tourism companies to increase their use of digital technology are demands from guests and the main obstacles is that technical capabilities of owners of the same businesses are limited.

Hypothesis 4: Businesses outside of the capital region are smaller and do not have the technical capabilities and financial resources to take advantage of developing digital technology. This negatively impacts the distribution of tourists to places outside the main circle around the Capital Region as large tour operators and agencies have easier access to guests and influence their choices of destinations through their products.

Hypothesis 5: Digital technology impacts all five forces of Porters Five force analysis and all stages of the tourism value system and has caused permanent changes to the tourism industry.

Aim of the project

Is there a digital divide between Icelandic tourism SME‘s andthe enligtened tourist?

Has digital disruption changed tourism and the competitiveenvironment?

Findings

Key findings from interviews

Tourism has changed

Expectations from guests have changed

Digital disruption – changed business environment

SME digital competence

SMEs profit from the use of technology

SME access to knowledge of possibilities

Obstacles

Seeking support and consulting

Questionnaire Results – key findingsOrganisation age, size and structure

Location – Capital Region vs. other regions

Business management culture with regard to ICT

Access to Internet

Attitude towards digtial technology

Usage of technology

Website and social media use

Booking and feedback

Does your company have a website?

90,7%

9,3%

Já

Nei

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Já Nei

Can services be booked and paid for on yourcompany website?

43%

52%

5%

0% 10% 20% 30% 40% 50% 60%

Já Nei Veit ekki /vill ekki svara

What social media platforms does yourcompany use?

67

11

17

6 5

60

22

29

5 6

46

1417

9 10

28

20 18

2429

0

84

73

106

102

0

20

40

60

80

100

120

Facebook Twitter Instagram Pintrest Linkedin

Daglega eða oftar 2-5 sinnum í viku 2-3 sinnum í mánuði Mánaðarlega eða sjaldnar Aldrei

Daily or more often2-5 times a week2-3 times a monthMonthly or less Never

High DigitalAccess SMEs

Upper DigitalAccess SMEs

Medium-LowDigital Access

SMEs

Very lowDigital Access

SMEs

High DigitalAccess

Tourists

Upper DigitalAccess

Tourists

Medium-LowDigital Access

Tourists

Very lowDigital Access

Tourists

Supply

Organisation age, size and structure

Location(Capital region vs.

other)

ICT access

Business/ management

culture

Design/ Usability / Functionality

Content access

Support or serviceaccess

DEMAND

Psychographiccharacteristics

(age, sex, education, ethnicity, etc.)

Socio-economicstatus

Place of residence(e.g. urban vs. rural

areas)

Mental propensity/ Motivation

ICT acceptanceand trust

Instrumental skills

Information skills

Usage

EnvironmentICT infrastucture (HW,SW, connectivity etc); social and economic environment (population, GDP, etc.); presence of service providers; finance and

pricing mechanisms; institutions (role and incentives); training; policy and governance; (incentives vs restrictions and censorship)

EnvironmentICT infrastucture (HW,SW, connectivity etc); social and economic environment (population, GDP, etc.); presence of service providers; finance and

pricing mechanisms; institutions (role and incentives); training; policy and governance; (incentives vs restrictions and censorship)

eTourism marketplace

Traditional marketplace

Tou

rO

per

ato

rsTr

avel

Age

nci

es–

„In

com

ing“

Tou

rO

per

ato

rsTr

avel

Age

nci

es–

„Ou

tco

ing

“

Digitaldivide

Digitaldivide

Digitaldivide

Digitaldivide

Digitaldivide

Digitaldivide

Answears by M&B Framework

4%

17%

10%

44%

1%

6%

5%

52%

57%

25%

25%

22%

88%

17%

41%

25%

40%

20%

71%

6%

56%

3%

1%

24%

11%

6%

0%

22%

0% 20% 40% 60% 80% 100% 120%

Stjórnun og stefna

Viðhorf til stafrænnar tækni

Virkni við umsjón og uppfærslur

Aðgengi að neti

Almenn notkun

Viðhorf til gesta og endurgjafar

Stærð og skipulag

Þrep 1 Þrep 2 Þrep 3 Þrep 4

SMEs categorized by M&B Framework

4%

29%

64%

3%

0% 10% 20% 30% 40% 50% 60% 70%

Þrep 4 Þrep 3 Þrep 2 Þrep 1

Hypothesis 1: Is there a digital divide?

The research findings give a rather clear view regardingthe digital divide. According to the survey results whenanalyzed through Minghetti and Buhalis‘s framework

about 67% of the SME‘s fall into third or fourth categoryof medium to low digital access SME‘s.

Hypothesis 2: Are SME‘s missingopportunities?

When there is a disequilibrium between the digitalcompetence of tourists and the SMEs offering services there is a high likelyhood that tourist with high technical competences

will seek the services of either booking websites or onlinetravel agencies as intermediaries to conclude their business. Another option for the tourist is to search for a destination

where the technical capabilities of the SMEs within the regionare similar to their own. The results support the hypothesis.

Hypothesis 3: Incentives and obstacles

The small size of Icelandic tourism SME‘s prevents themfrom taking advantage of the opportunities technology

might offer them and could help them grow. The growthis simply not fast enough for the owners/managers toput money and effort into building the knowledge and

training necessary.

Hypothesis 4: Size or location?

Researcher concludes that the findings suggest that SMEsoutside the Capital region are smaller and the technical

capabilities of their owners or staff for that reason lacking. Thatagain results in them not being able to reach the enlightened

tourist directly.

Increased business through international booking and sharingwebsites may suggest that SMEs have less direct influence ontourist decision making process. That again may impact tourist

choices of destinations within Iceland.

Hypothesis 5: Technology has changed tourism

Conclusion

There is a digital divide

Icelandic tourism SMEs are missing opportunities due to lack of technological knowhow

Main drivers of change – price controls, efficiency and guest demands

Main obstacles of change – knowhow and money

Size is a problem rather than location

Technology impacts all five forces of Porters Five Force Model

Discussion

Trends, strategy and the enlightened tourist

The enlightened tourist:

- expects to do business through digital channels.

- wants to seek information, experience and share his experiencs

- tourists and SMEs tell stories through short videos on socialmedia.

- bases decisions on recommendations of other tourists

Tourism SMEs neet to think through theirprocesses, information sharing, booking and

payment processes with regard to technology.

Tourism Innovation

Digital technology is the driver of tourism innovation.

New business models, online travel agencies, futuretrends and technology in tourism.

Tourism SMEs need to be aware of how big a roletechnology plays in the shaping of tourism services

and experiences.

Strategy, management and attitude

The attitude of management is key regarding change anddevelopment and that includes the use of technology.

The basis of successful use of technology is long term strategicplanning, need analysis for hardware and software, reorganizing processes, commitment and interest of

management and training at all stages (Buhalis, 2013).

Strategy, vision and values are thebasis of success in any business.

Sustainable tourism and the role of technology

Uses of ICT-based tools/applications for sustainable tourism: Information management

Managing destinations resources, sites and attractionsEnergy consumption

Interpretation – tourist educationCommunity participation

Tourist satisfactionEnabling partnership

Managing tourist flowIdentify market segments – Profiling visitors

Engaging with the tourists

Thankyou