Developing sources of competitive advantage in the Norwegian travel industry

The REISEPOL research project Developing sources of competitive advantage in the Norwegian travel industry consists of five sub projects. These projects are developed in close cooperation with Norway's leading travel companies and organizations. These are Color Line, Norwegian, SAS, NSB, Nordic Choice Hotels, Scandic, Rezidor Hotel Group, Thon Hotels, Skistar, Alpinanleggenes landsforening, Hurtigruten, Visit Oslo, Fjord Norge, NCE Tourism, Avinor, Visit Sørlandet (USUS), LO, NHO, NHO Reiseliv, Innovasjon Norge and Forum for Reiseliv. The project leader is Buskerud and Vestfold University College together with the research partners Agder Research and Menon Business Economics. Forum for Reiseliv is the research project administrator. The first sub project to be finished was the scenario analysis of Norwegian travel industry towards 2025. The four scenarios in the scenario cross are: Money talks, Urban & Exclusive, Bonanza, and Masterplan. The two latter encompasses a 50% drop in oil price and 20% decrease in the value of the Norwegian Crown. The estimated elasticities result in expected growth for Norway as travel destination at 117% og 109% for the Bonanza and Masterplan scenarioes, respetively. The expected value added for the two scenarios are 73% og 61%. Accordingly, the travel sector will be of greater importance in a situation with lower oil price compared to when it is high. Retrospectively, the oil price and the Norwegian currency have been weakened, and, thus, enable us to research the concequences for the Norwegian tourism industry. An pro-active travel policy for Norway versus liberalization is an important implication for the Government to consider in order to take out the potential in international and domestic markets towards 2025. WP2 Productivity and competence Productivity is highest in the intermediaries industry and lowest in F&B. The activity and experience industry has the lowest capital productvity indicating low return on investments. Internationally, the hotel industry is among the world's best. The following drivers of productivity are identified: Firm size, chain association, location in clusters or big cities, high education level, low turnover, and full time employees. WP 3 Innovation Value added and productivity are to a great extent innovation driven. Second and third generation public innovation programs seem to be more effective for today's innovation projects. These are network/cluster stimulation programs and regulatory/infrastructure means (taxes, laws, airports, roads). WP 4 Digital travel packaging More than half of incoming European guests to Norway buy travel packages. This is a product feature not commonly offered by Norwegian travel companies and thus are being sold by foreign agents and tour operators. The research results show that more attractive flexible packages may attract more visitors, higher paying visitors and more satisfied guest due to better overall and predictable travel experience. WP 5 Return on marketing Demand for travel is marketing elastic since consumers lack information about all relevant alternatives and are thus subject to influence through earned, own and paid media. The estimated cost of each arrival is between NOK 194 and 276. This represent an average return on marketing of ca 30 times the investment. The challenge of efficient funding represents a barrier to realize the market potential for travel to Norway.

The project consists of 5 Working Packages (WP) that correspond with each of the 5 secondary objectives of the project, and, in sum, result in the achievement of the primary objective related to increased international competitive advantage and a higher g lobal market share. The project has a nation- and industrywide ambition to make the Norwegian travel industry a world class industry cluster and one of the 5 most competitive and future oriented industries in Norway. Accordingly, the project consists of 20 of the leading tourism companies/entities in Norway to jointly contribute to the conduction of business relevant research that can be implemented by great parts of the industry to make significant international impact. It is the first time such a grea t portion of the travel industry has joined forces to cooperate to develop common scenarios and strategies for the future, and to develop and implement new models for labor and competence management, innovation, digital packaging, and international sales and marketing. Many of these models will be based on co-creation of concepts and activities among industry actors to exploit synergies. The research team consists of the two largest travel research institutions in Norway, i.e., Agderforskning and Buskeru d University College, and the leading research based analysis firm, Menon Business Economics. The constellation of researchers and analysts provide significant expertice, competence complementarity, and capacity to deliver according to the 5 objectives th at correspond with each of the WPs. Additionally, international partners will be used in the project. The research is funded by the industry with 9 MNOK, where 4.5 MNOK is cash. The cooperation among industry partners and the researchers is coordinated b y a secretariat that is cofunded and linked to Forum for Reiseliv. This enables a smooth interface between industry and research, and make use of existing industry networks that have been proven to be successful.