Minister Lintilä: Shortage of workforce should not impede growth of the tourism industry

In 2017, the number of tourism companies increased by 400, the companies recorded a turnover of more than EUR 6 million, and their employment effect was more than 1,000 man-years. The unprecedented growth in the number of tourists translates into development needs in the tourism industry.

Areas requiring attention include the availability of competent workforce, digitalisation, accessibility, sustainability and climate change, and the sharing economy and platform economy. These are the conclusions of the sector report on the tourism industry published on 17 January 2019.  The report examines the current situation and outlook of the accommodation, catering and programme services business in the tourism industry.

The year 2017 saw a significant increase in the number of tourists. Although the growth numbers were not equally high in 2018, the number of tourists continued to increase. By 2023, the number of overnight stays by foreign tourists is expected to increase at an annual rate of approximately 2 percentage points. 

As a growth industry, the tourism sector has faced a number of challenges. One of them is the lack of access to skilled workforce, which is preventing the growth and development of tourism companies in some areas.

“Growth of the travel industry should not be impeded by shortage of skilled workforce. The Ministry of Economic Affairs and Employment has launched a special project called Matkailudiili (Tourism deal) to improve the availability of workforce in the sector. This is a matter that definitely will require action from the future Government, too,” says Minister of Economic Affairs Mika Lintilä.

The turnover for the accommodation, catering and programme service companies totalled EUR 9.7 billion in 2017, continuing the upward trend of recent years. Their employment effect was more than 72,000 man-years.  Furthermore, according to 2015 estimates, the accommodation and catering industry alone accounted for 6,000 man-years by providing employment through temporary employment agencies. In 2017, nearly 19,000 companies were engaged in the accommodation, catering and programme service business.  The catering business generated most of the turnover (55%). Similarly, it accounted for the highest number of personnel (70%).

Most tourism companies are located in the regions of Uusimaa, Pirkanmaa and Southwest Finland. Tourism companies in these regions and in the regions of Lapland and North Ostrobothnia have more employees and a higher turnover than companies elsewhere in the country.

Companies’ profitability and return on capital fairly weak

In the sector’s core cluster, turnover is growing, but profitability measured by operating margin continues to be rather weak. Similarly, the return on capital is fairly low. By contrast, the equity ratio of tourism companies has improved somewhat.

“Growth requires investments in various areas of tourism. In addition to accommodation capacity, other areas requiring further investment include the content of tourism products and business development in the sector’s companies,” says Susanna Jänkälä, Sector Manager at the Centre for Economic Development, Transport and the Environment for North Ostrobothnia.

Social responsibility as a competitive asset

Responsible and digitalised business has become a clear competitive asset in the tourism industry. Responsibility generally stems from the company’s own values and ideologies, but to a growing extent it is also influenced by the pressures and demands of the customers and business partners. Sustainable choices help companies cut costs and thereby improve their profitability. Companies with responsible business practices also attract employees: a company that shares its employees’ sustainable values is an attractive employer in an industry suffering from workforce shortage.

The impact of digitalisation on the business of tourism companies is growing rapidly. It is increasingly easy for companies to market their services internationally with the help of fairly simple technical solutions. However, competition for international customers is getting tougher, and companies need to increase their investment in international visibility. Digitalisation can also lead to significant improvements in organisations’ internal production processes and production control. Quick and determined efforts are required to seize the opportunities offered by digitalisation.

The sector report on tourism for 2019 was published in Helsinki on 17 January 2019 at the Matka2019 travel fair.   The report discusses the current situation and outlook of the sector.

Inquiries:

Susanna Jänkälä, Sector Manager, Centre for Economic Development, Transport and the Environment for North Ostrobothnia, tel. +358 295 037 056
Katri Lehtonen, Development Director, Ministry of Economic Affairs and Employment, tel. +358 295 064 926