- NextGenerationEUrepresents an opportunity for Irish companies to break into new markets or scale their presence in existing markets
- EU member states are striving to transform their travel and tourism sectors around the twin pillars of digitalisation and sustainability, with thousands of projects in train or set to be completed by 2026.
- The Enterprise Ireland Eurozone teamcan help you find the right travel and tourism digitalisation projects to target
Tourism is on the way back. While the pandemic severely disrupted the travel and tourism sector, every region saw increases in travel in 2022, according to the World Tourism Organization (UNWTO).
In fact, more than 900 million tourists travelled internationally in 2022. While this was twice as many as in 2021, it was just 63% of pre-pandemic levels. Europe fared better than most other regions, however, with numbers returning to close to 80% of 2019 figures.
Hotels, hospitality providers, travel agencies, transport companies, tour operators and activity providers can be reasonably confident of seeing improved revenues again in 2023. This is despite and in ways subject to macroeconomic challenges such as inflation and the war in Ukraine.
Broadly speaking, the industry in Europe continues to offer substantial opportunity to Irish travel tech companies. And with substantial funding flowing across the region from the €806.9 billion NextGenerationEU recovery and resilience programme, there is unprecedented
How digital tools are transforming tourism
Across the travel and tourism industry in Europe, digital solutions are making the industry more efficient and more cost-effective, while also smoothing the journey for consumers.
In the accommodation sector, for example, accommodation providers across all price levels are increasingly using digital technologies to enrich and improve their offer. This includes innovations such as:
- Mobile or remote payment
- Online or mobile check-in
- Virtual assistance using chatbots
- Virtual tours
- Virtual keys (on smartphones).
Likewise, the cultural sector is also taking more advantage of digital tools. In this space, these can include:
- online ticketing
- on-site QR codes, beacons and touch screens
- attraction-specific apps
- interactive and virtual reality installations.
Furthermore, the pandemic also led to an increase in offerings such as virtual visits to museums or other attractions, online lessons (such as cooking lessons) and experiences, or dedicated e-commerce platforms for food, wine and crafts.
Real potential across the value chain
Across every aspect of the travel and tourism experience, from research and booking, to how people get around to their stay and what they do on their trip, there are opportunities for specialist travel tech providers to improve the experience for both the traveller and the service provider.
The opportunity is broader than specific travel tech solutions, however. Fintech, cybersecurity, and data analytics and protection firms, for example, may find valuable opportunities in this sector.
Opportunity abounds around sustainability
Under pressure from government as well as from the consumers they service, travel and tourism companies are increasingly committed to sustainability. This can include:
- reducing energy consumption
- cutting carbon emissions
- reducing waste
- sourcing local providers of goods and services.
In terms of the offer to travellers, sustainability comes to the fore in the shape of eco-tourism, slow tourism, cultural exchange, community development and environmental protection.
Other avenues to sustainability include newer trends that help to reduce overtourism and increase bookings in the low season, such as appealing to digital nomads and promoting long stay holidays, both of which are significant factors in Italy and Spain.
Irish companies thriving in tourism
While Ireland has long excelled as a tourist destination, it’s also home to an increasingly vibrant travel tech sector.
Irish companies succeeding across Europe in the sector include Campsited, a booking platform for campsites and outdoor activities, car rental and mobility solutions provider CarTrawler and biometric travel security specialists Daon.
Expert advisors in Enterprise Ireland’s network of offices across Europe, together with its Market Research Centre in Dublin can support your business as it investigates market opportunities, including making local introductions and helping you to build your network.
A tech savvy-market with substantial public funding for transformation, France offers opportunities to any company with a distinctive offering.
The travel and tourism landscape in France
One of the world’s largest tourism markets, France attracts over 80m tourists every year. Across accommodation, attractions, activities, transport and other services, the sector employs millions of people and accounts for about 7% of GDP.
The government has encouraged rapid digitisation and transformation with investment in digital infrastructure and initiatives such as the French Tech Visa program. Local start-ups are harnessing emerging tech such as artificial intelligence, virtual and augmented reality, and blockchain to improve consumer experience.
France has a well-developed and advanced travel IT sector, across online booking and reservation systems, mobile apps, travel management software, analytics, and more. The European Travel Commission valued this sector in France at €50 billion in 2019, making it the second largest in Europe after Germany.
Sustainability is key here as elsewhere. Many French travel tech companies are working to reduce the environmental impact of travel, through carbon offsetting programmes and sustainable travel planning tools.
Key stakeholders in France
Understand the travel and tourism opportunity in France
While the French typically tend to be early adopters, there is still plenty of room for growth in the market. Furthermore, the government is investing heavily to revive and reinforce the market in the post-pandemic era.
Of the €100 billion France Relance national recovery plan, France allocated €18 billion to investments in tourism infrastructure, support for green tourism initiatives and funding for vocational training.
Furthermore, the €1.9 billion 10-year Destination France plan addresses five key challenges:
- Recruiting talent to work in the sector
- Reinforce the sector’s resilience and help improve the tourism offering
- Develop French tourism assets
- Respond to the challenge of transformation, including around sustainability and digital tools
- Promote France and consolidate its market share
The key opportunities for Irish companies in the market are around:
- Online booking and reservation systems
- Mobile apps and platforms
- Harnessing artificial intelligence and big data
- Virtual and augmented reality
- Sustainable tourism.
Selling into France
When it comes to travel tech, the French market is well established and highly competitive, benefitting from a strong culture of innovation and mostly favourable regulatory conditions. It’s crucial to have a clearly defined and innovative value proposition to present to the market.
Before starting to sell into France, research the local travel tech market to identify the key players, industry trends, customer needs, and competition. You can use this information to develop a targeted approach.
It’s useful to remember the sales cycle can be as long as 18 months in France, due to extensive due diligence. The upside is that business relationships tend to be long and fruitful after this process has been completed successfully.
Localisation is vital in this highly competitive market. While initial networking may happen in English, the language of business is French. If you are not ready to hire a fluent French speaker, ensure you bring an interpreter or a local partner to meetings. This is to understand important cultural nuance as well as to cross the language barrier.
Likewise, ensure your products and services are tailored to the French market. This may include adapting marketing materials and your user interface to appeal to French customers.
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Developing a local approach is key to unlocking the digital transformation potential of this large but still fragmented market.
The travel and tourism landscape in Italy
With 64.5m international tourist arrivals each year, Italy ranks fifth in terms of global tourist destinations. The sector generates €90 billion annually, accounting directly for over 6% of Italian GDP and 7% of total employment. Tourist numbers have recovered since the pandemic, with 350 million visits in 2022.
Italy also has 58 UNESCO World Heritage sites, more than any other country, and 4,292 museums. While culture and tourism are cornerstone sectors of the Italian economy, they lag when it comes to digital transformation, however. Cash payments in physical ticketing offices still account for many sales.
The Italian tourist board (ENIT) is pushing to make tourism more sustainable – 82% of accommodation facilities now use sustainable products – and more evenly balanced throughout the country. It is encouraging tourists to visit villages and rural destinations as well as the tourist honeypots of Florence, Rome and Venice.
Key stakeholders in Italy
Understand the travel and tourism opportunity in Italy
Through its National Recovery and Resilience Plan (PNRR), Italy is channelling €2.4 billion of NextGeneration EU funding to boost digitalisation in the tourism sector. This is going to fund:
- A €100m digital tourism hub to connect the Italian travel and tourism industry
- €1.8 billion towards greater competitiveness in the industry
- The €500m Caput Mundi project to redevelop and revitalise Rome.
While Italy has more hotels than any other European country, most are family-owned and large hotel chains don’t have a huge presence. That makes for a fragmented market.
The same is true for the tour and activity sector, which is not dominated by big players. The outdoor sector has grown significantly in recent years in Italy, and it has the most activities available of any European country.
Selling into Italy
Italy is an attractive market for new entrants with technology solutions. It is very open to working with international vendors if their innovation is more digitally advanced than the incumbent/competitors. Digital transformation is high in the companies and local government agenda. There is a proactive interest in new technologies to support the industry and to overcome some of the challenges.
Likewise, businesses in the sector are interested in providing a more sustainable product or service offering to the tourists who visit Italy, so enabling that also presents a clear opportunity.
It’s important to target the market directly and have a local approach. Italian companies already have the advantage of speaking the language and having a presence in the market. They also have a network of contacts, which is vital in this relationship-based business environment.
Therefore, it’s important to invest time in building relationships and to be perceived as local, with an active Italian partner or a presence on the ground.
A world leader in tourism, Spain is pushing hard to see more innovation and digitalisation across all levels of this vital sector.
The travel and tourism landscape in Spain
As the recovery from international lockdowns continued, along with the related acceleration in digitalisation, Spain saw 58.5m tourist arrivals in 2022. It leads Europe (while being third in the world) on the World Economic Forum’s travel and tourism competitiveness rankings.
Given the importance of tourism to its economy, Spain has historically invested heavily into transport infrastructure and connectivity. In recent years, it has also pushed to invest in its historical heritage, the Pilgrims Road to Santiago de Compostela and innovation in tourism companies.
The country accounts for 9.1% of the European hotels industry, with large international players dominating the market, while numerous smaller companies also vie for bookings. The big companies typically operate multiple hotel brands to appeal to different segments. Hotels at every level compete with Airbnb and other short stay platforms.
The Spanish online travel sector is pioneered by Madrid-based tech and global distribution leader, Amadeus.
Only one Spanish company, Globalia, is among the big four travel intermediaries in the market. The other are Booking.com, Expedia and TUI. All four are highly active in mergers and acquisitions, as they seek competitive advantage in Spain and globally.
Key stakeholders in Spain
Understand the travel and tourism opportunity in Spain
Spain’s national allocation for grants under the Recovery and Resilience Facility (RRF) amounts to €69.5 billion. It has allocated an unprecedented €1.5 billion in 2022 to actions in its plan to modernise the tourism sector and make it more competitive.
Through the state-owned SEGITTUR company, the Spanish Secretariat of State for Tourism is heading the Smart Destinations project. This is an international model aimed at harnessing innovation and knowledge transfer to improve the sector’s competitiveness and sustainability and develop better governance in tourism.
In particular, the tourism ministry is devoting €25m to develop and implement transformative technological projects. Particular areas of focus for digital transformation in the sector include:
- The internet of things, machine learning and big data
- Monitoring tourist flows
- Personalising the offer to consumers
The local travel tech start-up ecosystem is buoyant, receiving more funding than any other sector in Spain in 2022, according to the Bankinter Foundation of Innovation.
An interesting opportunity is the new international Tourism Innovation Hub in Madrid. Sponsored by Mastercard and backed by the Spanish government, the hub aims to help foster global, sustainable and inclusive growth for tourism.
Selling into Spain
Spain is a competitive market for mobility and typically has a relatively long sales cycle regardless of the sector, so a premium offer and patience are required.
Make sure you have local support in the market, as you need to speak the language in this cost-driven market, and sales are heavily based on reputation and relationships.
Spain is one of the most decentralised countries in the world, with 17 autonomous communities and five official languages, so a one-size-fits-all approach may not work.
In fact, the Spanish state is managing 55% of the national recovery and resilience funding, with regional authorities administering the rest. Market entrants need to understand local, regional and national regulations and bureaucracy.
Start planning now for the FITUR International Tourism Trade Fair, which will be held in January 2024 (dates to be confirmed) at IFEMA in Madrid. This is the leading global trade fair with a focus on Spanish- and Portuguese-speaking markets.
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