Chapter Preparing tourism businesses for the digital future Abstract

Creating value through digital innovation, disruption and transformation
Understanding how value is co-created and shared between multiple collaborating stakeholders is important in unlocking the potential of the digital economy. For instance, social media platforms, including photo sharing and journey tracking apps allow travellers to share geotagged photos with friends and ‘followers’. They also add value to SMEs in a destination who can use these high quality photos at low cost to market their products and services. For governments, the challenge is to ensure that SMEs are part of these new value ecosystems, and that the value generated by these new digital businesses can be scaled, captured and shared by all those that contribute value. For example, if local community assets such as parks, gardens and public streets are contributing value, then some of the value captured should go back into maintaining and regenerating those assets.
Digitalisation is transforming traditional business practices with transformation occurring on a number of fronts including customer engagement, marketing, business management, business planning, product development and service delivery (Table 2.4). The implications of transformation for tourism SMEs are significant because digitalisation moves the production of visitor experiences from linear value chains to value ecosystems (Kelly, 2015; WEF, 2019). While there are advantages to be derived from expanded markets and productivity gains from value adding, such as increased information enhancing visitor awareness, the complexity of the marketplace reduces the control that tourism organisations have over the curation and presentation of the destination.
Capacity building initiatives such as support for business mentoring, experimentation through living labs, workshops and online courses provide an opportunity to experiment with these new kinds of value creation and capture. Such initiatives encourage SMEs to reassess their business models, and make key changes to both strategy and practice. Israel has established a tourism accelerators programme to support new business creation and expansion of existing tourism businesses, as well as encouraging the adaptation of tourism products and services for international markets. Local authorities can also participate in these accelerators, to identify tourism policy solutions to emerging challenges.

Table 2.4. Creating value through digital transformation in tourism