Ecotourism in Norway

8/12/2019 Ecotourism in Norway

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The governments tourism strategy

Destination Norway National strategy for the tourism industry


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The governments tourism strategy

Destination Norway National strategy for the tourism industry


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Foreword

The tourism industry is one of the worlds fastestgrowing business sectors, and Norway is well placedto capture its share of this global growth. In view of thetourism industrys potential for future value creation,

the natural advantages that Norway has, and the indus-trys considerable importance to the rural economy,the Norwegian government has chosen to give a highpriority to the sector. Consequently, the governmentintends to pursue a particularly vigorous policy for thepromotion of tourism in Norway.

Norway has the wherewithal to offer extremelyattractive tourism products. The Norwegian land-scape is unique, and forms the basis for a wealth ofexperiences. By exploiting our natural competitiveadvantages and providing an exceptional, high-qualityexperience, Norwegian tourism companies will beable to justify the price level necessary to increase thesectors protability.

Many important players within the tourism industryhave already developed products and methods ofcollaboration whose example points the way. The gov-ernments strategy is entitled Destination Norway . Wehave formulated three main objectives for our effortsin the eld of tourism:

Increase value creation and productivity within thetourism industry.

Increase the number of year-round jobs and developmore robust companies, particularly in rural areas.Increase the number of unique, good-quality experi-ences that attract more guests with a high willingness

to pay.

These objectives can be achieved through long-termand effective efforts to boost the tourism industry,promote sustainable development and increase col-laboration.

The tourism industry is one of the business sectorsthat will contribute to Norways future economic suc-cess. The governments tourism policy will contributeto the development of a highly productive, knowledge-based industry.

The Royal Norwegian Ministry of Trade and Industry will work closely with the tourism sector on the imple-mentation of this strategy.

10 April 2012

Trond Giske

Minister of Trade and Industry


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P h o t o : T er j e B or u d / www .vi s i t n or w a y . c om


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1 A knowledge-based strategy . . . . . . . . . . . . .8

1.1 New knowledge and new experience. . . . . . . .8

2 Developments and key trendsin the tourism industry . . . . . . . . . . . . . . . . .16

2.1 Global developments. . . . . . . . . . . . . . . . . . . .16

2.2 Developments in Norway . . . . . . . . . . . . . . . .18

2.3 Key trends globally and in Norway . . . . . . . . .20

3 Tourism policy goals and focus areas . . . .22

3.1 Active tourism policy . . . . . . . . . . . . . . . . . . . .243.2 Tourism policy goals. . . . . . . . . . . . . . . . . . . . .24

3.2.1 Sustainability as a premise . . . . . . . . . . . . . . .24

3.2.2 Increased value creation, qualitatively goodexperiences and vibrant rural areas . . . . . . . . . . . . .25

3.3 Stronger coordination gives better results . . .26

3.3.1 Public sector coordination . . . . . . . . . . . . . . .26

3.3.2 Coordination in the tourism industry . . . . . . .27

3.3.3 Coordination between the authoritiesand the tourism industry . . . . . . . . . . . . . . . . . . . . .27

3.4 New priority areas . . . . . . . . . . . . . . . . . . . . . .29

4 A coordinated tourism policy . . . . . . . . . . .32

4.1 Policy design. . . . . . . . . . . . . . . . . . . . . . . . . . .32

4.1.1 Strengthening the coordinating role ofthe Ministry of Trade and Industry . . . . . . . . . . . . . .32

4.2 Operationalisation . . . . . . . . . . . . . . . . . . . . . .34

4.2.1 Innovation Norways engagement in tourism . . 35

4.2.2 Other public administrative bodies of majorimportance to the tourism industry . . . . . . . . . . . . .39

4.3 The authorities collaboration with thetourism industry . . . . . . . . . . . . . . . . . . . . . . . . . . .39

4.4 Knowledge as the basis or tourism policy . . . .41

4.5 Measures to establish a more coordinatedtourism policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

5 An improved tourism structure . . . . . . . . . .42

5.1 The current structure o tourismmanagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

5.2 The challenges posed by todays structure. . . .44

5.3 An organisational model or tomorrows

tourism industry . . . . . . . . . . . . . . . . . . . . . . . . . . .455.3.1 Same structure nationwide . . . . . . . . . . . . . .46

5.3.2 A clear allocation of roles andresponsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

5.3.3 Implementation of the structural changes . . . .48

5.4 Measures to organise the tourism industrymore effectively . . . . . . . . . . . . . . . . . . . . . . . . . . .49

ContentsPhoto: C.H./www.visitnorway.com


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6 Destination and experiencedevelopment . . . . . . . . . . . . . . . . . . . . . . . . . . .50

6.1 Increased collaboration within the tourismindustry and with other business sectors . . . . . . .50

6.2 Natural and cultural heritage as the basisor value creation . . . . . . . . . . . . . . . . . . . . . . . . . .55

6.3 Competence. . . . . . . . . . . . . . . . . . . . . . . . . . .62

6.3.1 Year-round jobs preserve competence . . . . . .62

6.3.2 Recruiting for education and business . . . . . .62

6.3.3 Competence enhancement . . . . . . . . . . . . . .64

6.3.4 Innovation and entrepreneurship in thetourism industry . . . . . . . . . . . . . . . . . . . . . . . . . . . .66

6.3.5 Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67

6.4 Quality assurance and quality enhancement . . 69

6.5 Collective benets . . . . . . . . . . . . . . . . . . . . . .70

6.6 Access to capital. . . . . . . . . . . . . . . . . . . . . . . .73

6.7 Accessible destinations . . . . . . . . . . . . . . . . . .74

6.7.1 National Tourist Routes . . . . . . . . . . . . . . . . .74

6.7.2 Greater opportunities for the use of publictransport in a tourism context . . . . . . . . . . . . . . . . .75

6.7.3 Air travel and tourism . . . . . . . . . . . . . . . . . . .76

6.8 Svalbard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

6.9 Product and destination developmentmeasures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78

7 Sales and marketing . . . . . . . . . . . . . . . . . . . .80

7.1 Norways reputation. . . . . . . . . . . . . . . . . . . . .80

7.2 Marketing Norway as a destination. . . . . . . . .827.2.1 Use of existing awards when marketingNorway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

7.3 Coordination between marketing activitiesand the sales organisation . . . . . . . . . . . . . . . . . . .89

7.4 Measures to improve the marketing andsale of Norway as a tourism destination. . . . . . . . .90

Photo: C.H./www.visitnorway.com


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1 A knowledge-based strategy The government is launching a new strategy for thetourism industry entitled Destination Norway . Thestrategy is based on new, empirical and documentedknowledge, and concentrates the focus of public sectorefforts to reach the governments overall objectives.

The term sustainability is used throughout, and itsmeaning dened in the new strategy. The term sustain-ability includes protection of the environment, socialdevelopment and economic value creation.

The governments political platform states that ithas chosen to continue its emphasis on the tourismindustry because Norway is particularly well placed tosucceed in this area, and because the industry is ex-tremely important to business development through-out the country. However, in order for a specialemphasis on the tourism industry to be protable froma socio-economic point of view, the industrys earningscapacity must be adequate. This requires systematic

cooperation, innovation and investment.Since the government published the previous

national tourism strategy, the industry has beenthrough a nancial crisis and a volcanic-ash crisisthat have created new challenges and given us a newunderstanding. We have also gained new insight andexpertise through the measures and activities thathave been implemented, e.g. pilot projects that give uspractical experience and identify new opportunities.

We have also been in regular contact with industrystakeholders regarding the sectors requirements andhow public sector efforts can be targeted as accuratelyas possible.

The new strategy is based on knowledge. It hasbeen drawn up on the basis of what we know aboutthe needs of the tourism industry and the opportuni-ties facing it. Knowledge will also be one of the mostimportant input factors for tomorrows competitivetourism industry.

1.1 New knowledge and new experienceIn recent years the Ministry of Trade and Industryhas acquired new knowledge and expertise through a

number of analyses, reports and pilot projects. A briefaccount of these is presented below.

Tourism industry billion, Oxford Research (2009)Oxford Research has analysed how much the Norwe-gian tourism industry receives in public funding. Theanalysis shows a considerable increase in the period20042007. NOK 693 million was allocated to the tour-ism industry in 2004. The corresponding gure in 2007

was NOK 1.085 billion a nominal increase of 56 percent compared with 2004. State agencies provided NOK524 million, with grants from Innovation Norway makingup around 60 per cent of state funding. Local authoritiesallocated NOK 322 million to the tourism industry, whilecounty councils and county governors allocated NOK219 million and NOK 21 million respectively. Seen inrelation to the industrys share of the national economy,grants to this sector are given a high priority.

The largest share of the funds was allocated to thecategory proling of Norway or the region as a tourismdestination (NOK 318 million). Of the NOK 755 million

that can be broken down by county, the tourism indus-try in Nordland was the largest recipient of public funds(NOK 95 million). The regional development aspect ofthe funding is plain. Administrative costs associated withgrants to the tourism industry totalled NOK 117 million.

Since the data was collected by means of a ques-tionnaire, care should be taken when interpreting thendings. Furthermore, it is important to note that thedata collected is restricted to direct public appropria-tions. The public administration assists the tourismindustry in many ways other than direct nancialallocations. For example, local authorities assist thetourism industry through the development of infra-structures and services. The state sponsors a varietyof cultural activities, which represent important touristattractions, while government transport policy is alsoimportant for the tourism industry.

A knowledge-based Norway, Torger Reve andAmir Sasson (2011)In the study A knowledge-based Norway, the tour-ism industry was one of 13 sectors to be analysed. Thereport places the tourism industry under the heading

Major industries that stayed at home, along with theretail and construction sectors. The study shows thatthe tourism industry has a relatively low level of value


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P h o t o : J oh a nWi l d h a g en / www .vi s i t n or w a y . c om


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creation per employee, low cluster attractiveness, lowinvestor attractiveness, low educational attractiveness,low talent attractiveness, and low research and innova-tion attractiveness. The industry also scores poorly

with respect to knowledge attractiveness, given that itis widely dispersed, fragmented and not particularlyinterested in developing as a business community. Thereport also points out that the quality of Norwegiantourism products is variable and that Norway is a high-cost country.

The study states that although the Norwegiantourism industry has been an international business formore than a century, it has not managed to strengthenits international competitive position to any great ex-tent. The most protable portion of the Norwegian tour-ism industry remains that which is located in the major

cities. The report points out that the tourism industryhas a cost and/or market problem, in that it is unable tocreate products that provide a satisfactory prot mar-gin. Compared with the other business sectors studied,the tourism industry appears to be a low-competencesector, generating low prot margins and struggling toattract staff with the competence and service-minded-ness that it depends on. In this light, says the report, itmay seem rather strange that so many of the countrysregions are going in for developing the tourism andexperience industry as an important business area.

The analysis of the tourism industry was under-taken as an independent study entitled A knowledge-based tourism industry, cf. below.

A knowledge-based tourism industry, MenonBusiness Economics (2010)Menon documents the fact that Norways revenuesfrom foreign tourists have trebled since 1970 (meas-ured at xed NOK). At the same time the Norwegiantourism industry has lost market share from 0.9per cent of global tourist exports in 1970 to 0.5 percent today. Menon points out that high salary and

cost levels have put Norwegian tourism enterprisesat a disadvantage in the competition for foreign (andNorwegian) tourists. The tourism industry is, moreo-

ver, extremely labour intensive: 30 per cent of theindustrys revenues go on salaries, compared with 14per cent for Norwegian businesses as a whole.

Norways high salary and cost levels have resultedin many labour-intensive companies losing theircompetitiveness and going out of business. Those thathave survived have skewed their output in a moreknowledge-based direction, with the focus on highquality and innovation rather than price. Accordingto Menon, the tourism industry has only to a limitedextent followed the same path.

At the same time there are strong indications thatNorways tourism industry is changing for the better.Menon documents that the industry has become lessfragmented, ownership is being concentrated in fewerhands, and the industry is becoming more integrated,

which increases its long-term investment capabilityand in-house competence, while reducing conictsrelating to the funding of collective benets. Thebulk of this integration can be found within individualsegments, e.g. hotel chains which take an increasingshare of the total market, as well as a few, large trans-port companies, tour operators and travel agencies.

Another development trend is the steady rise incompetence levels within the industry, particularlyamong experience providers. Stronger cluster at-tributes, e.g. closer links between the various types ofbusinesses, also contribute to knowledge acquisitionand dissemination. A third development trend is thatcultural and other experiences are assuming an evermore signicant position within the industr y.

Socio-economic analysis of industrial policymeasures with respect to the tourism industry,SNF (2011)In this report SNF (the Institute for Research inEconomics and Business Administration) assesses theextent to which public industrial policy with respectto the tourism industry can be said to have a socio-

economic justication. A key premise for this reviewis that publicly funded measures must seek to redresssome form of market failure, since any such failure of

hoto: C.H./www.visitnorway.com


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the market may lead to the industry being unable toexploit its potential for socio-economic value creation.

SNF has conducted a survey of companies withinthe tourism industry. The survey showed that a majorityof industry players feel they are dependent on publiclyfunded measures, since private institutions have failed to

provide enough schemes such as venture loans, invest-ment subsidies and stipends. SNFs main conclusionis that publicly funded measures must have a socio-economic justication. That the tourism industry itself iskeen for industrial policy measures to be implemented isnot reason enough to pursue such a policy.

The SNF report asserts that the tourism industry,more than other business sectors, seems to be sufferingfrom a particular failure to coordinate its efforts, dueto the fact that it is more fragmented than most othersectors in Norway. As a result more factors in the tour-ism industry may be characterised as collective benetsthan in other business sectors. The main message is thatindustrial policy must be designed such that it correctsthis and other forms of market failure, and in this wayinuences private enterprises within the tourism indus-try to move in the direction that the authorities want.

Destination management bodies in Norway,report by the Norwegian HospitalityAssociations Structural Committee (2011)In this report the term destination management bodiesis used collectively to describe the established tourism

sector: associations and councils for the promotion of tour-ism, destination management organisations, county andregional tourism boards, tourist information ofces, etc.

How the established tourism industry should beorganised and nanced has been a matter for debatebetween private and public sector entities from timeimmemorial. An analysis of todays structure (owner-ship, management, funding, tasks and competence)shows that there are a vast number of small destinationmanagement organisations and a high level of fragmen-tation. Most such bodies perform a large number oftasks, which means they are heavily dependent on a fewindividuals with considerable, specialised expertise, andare vulnerable to change. While lines of collaborationseem to work well, the challenge lies in the claricationof roles, funding and the prioritising of tasks.

Thematic tourism bodies t well within a strategy forhigher-end niche products at specialised destinations,

while geographically based destination managementbodies often have a more wide-ranging responsibilityfor generic marketing aimed at the volume market. Thetwo types of organisation are therefore complementary.However, synergies are not always realised. There is a

higher degree of satisfaction with thematic tourism bod-ies. One challenge is that many of the geographicallybased bodies are nanced at county/local authority

level, while most thematic bodies are nanced at thenational level. This means that demands for collabora-tion must be made more explicit.

It is widely recognised that destination manage-ment bodies have a funding problem. Private investorspoint out that this is linked to the fact that the organi-

sations engaged in this eld are too many and toosmall. At the same time the report reveals that thereare almost as many nancing models as there aredestination management bodies, which prevents op-portunities for economies of scale. Many also fear thathaving a smaller number of larger entities will weakentheir ties to the local tourism industry.

The report suppor ts a move to develop a smallernumber of larger entities, with a clear focus on priori-tised tasks. This will require both private and publicsector owners to clarify their demands with respectto the services and tasks these bodies perform. Localbranches can carry out day-to-day activities, while larg-er units can perform more challenging tasks. This willensure close ties at local level, while affording greateroperational efciency. The repor t also proposes theestablishment of a committee charged with resolvingthe nancing situation.

The role of local authorities in developingtourism destinations, report by Mimir for theCentre of Competence on Rural Development(2011)

The report examines the role of local authorities inthe development of tourism destinations through casestudies in nine selected regions. Common to all tourismdestination development is the need to create an all-inclusive package that makes the destination more at-tractive to visitors, and in this way strengthens businessactivity, competitiveness and the range of products beingoffered. This starting point provides important guidancefor interaction between the local authority and all thoseengaged in tourism. The report shows that tourismcompanies have wide-ranging expectations with respectto local authorities contribution to the development oftourism destinations. With these expectations stretchingfrom the performance of their statutory obligations topolitical decisions, a holistic local authority engagementcannot be undertaken through destination manage-ment bodies alone. The range of activities that localauthorities are expected to engage in means that theymust possess broad competence. The report points tochallenges relating to the local authorities competencerather than their level of engagement. Local authoritycompetence in the eld of tourism must be assessed inlight of the scale of tourism in the area, and what is the

most expedient allocation of roles and responsibilitiesbetween the various players at local and regional level.Mimir believes that enhanced local authority compe-


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tence, a clearer allocation of roles and responsibilitiesbetween those involved, more formal collaboration mod-els and requirements with respect to strategic planningand a long-term perspective for the effort could result ingreater effectiveness and improved resource utilisation.

A transport boost for the tourism industry atourism-oriented transport policy, NorwegianHospitality Association (2010)

The report is the Nor wegian Hospitality Associationsinput to the counties regional planning strategies andthe governments National Transport Plan for theperiod 20142023, as well as the governments newtourism strategy. The Norwegian Hospitality Associa-tion believes that inadequate investment to upgradethe standard and capacity of the countrys transportinfrastructure is weakening the competitiveness andcapacity for growth of the tourism industry, an indus-try that accounts for many jobs in rural areas.

The association calls for cooperation between theMinistry of Agriculture and Food, the Ministry of

Transport and the Ministry of Trade and Industry inorder to integrate tourism more fully into the National

Transport Plan. Furthermore, while inter-depar tmen-tal cooperation is necessary for the development of anational tourism strategy, the association wishes to seebetter coordination between the transport and tourismsectors at regional and local level. With respect to de-

velopment effor ts, the association envisages partner-

ship solutions between the public and private sectors.

Evaluation of Innovation Norway, Econ Pyry(2010)

The Ministry of Trade and Industry has evaluatedInnovation Norways performance to see whether it isreaching its targets in an effective manner and assesshow the companys organisation operates internallyand in partnership with other stakeholders. Theevaluation was also intended to provide advice on howInnovation Norway should be organised in the future.

According to Econ Pyry, which was responsible forthe evaluation, it is more likely than not that overall Innovation Norways various schemes do contribute toincreased value creation in the companies that receivesupport. However, there are no grounds for conclud-ing that all Innovation Norways measures contributeto increased value creation.

Econ Pyry believes that Innovation Norwayallocates nancial support in a professional and well-founded manner. At the same time Econ Pyry be-lieves that Innovation Norway has failed to adequatelydevelop itself as a knowledge-based organisation and

shaper of Norwegian industrial policy.Furthermore, in Econ Pyrys assessment the link

between desired outcome and measures implemented

is imprecise and there is a need to make this link moreclear-cut. The organisation should improve the wayit structures its goals and its management should bebased more on overarching frameworks than todaysmicro-level control. A larger proportion of the meas-ures implemented should support projects whose key

objective is innovation of a national or internationalnature. And a larger proportion of the funds grantedshould be made available to companies located in ornear the countrys major urban centres. The evalua-tion did not uncover any need to change InnovationNorways organisational structure.

Survey of passengers on cruise-based tourism(Grontmij Carl Bro, 2010)

To provide itself with greater insight into the impor-tance of cruise-based tourism in Norway the Ministryof Trade and Industry commissioned a survey ofcruise passengers at stopovers along the Norwegiancoast. The analysis is based on information gatheredfrom 2,073 cruise passengers and 206 businesses. Thereport concludes that cruise-based tourism is of greatsignicance for the Norwegian economy and employ-ment in Norway, particularly in the towns and villagesalong the west coast.

Overall the cruise sector contributes NOK 2 billion a year to the economy and provides jobs for around 1,600people during the tourist season and 1,100 in the restof the year. If indirect contributions are included, the

sector is estimated to generate gross revenues of NOK4 billion, and employ some 3,200 people during theseason and 2,200 in the rest of the year (2009 gures).

The impact on employment is largest in the small ports. Tourists consumption when they go ashore has

more to do with the duration of the stopover and thephysical accessibility of the town centre than the townssize and range of products and services. The analysisshows that tourists are both prepared to spend moremoney and that they spend less than planned.

This special form of tourism can create logistical andcapacity problems in many Norwegian harbour towns,because many visitors arrive at the destination at the sametime. Cruise-based tourism nevertheless provides a con-siderable socio-economic benet under current operatingconditions. However, the report indicates that the effectcould be further enhanced by structuring the cruise sec-tor in a better way, e.g. by obtaining a better overview of

which ships will be putting into the various cruise destina-tions and when, and improved collaboration between thecruise sector and the onshore tourism industry.

Sustainable Destination Norway 2025,

Vestlandsforskning (2011)Sustainable Destination Norway (SDN) is one of threeresearch projects nanced by the Ministry of Trade


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and Industry and the Research Council of Norwaybetween 2008 and 2011 to enhance the factual basisfor developing policies for a more sustainable tourismindustry in Norway. SND developed a scenario modelbased on research in three areas: dialogue processesto develop sustainable tourism; the link between cli-mate policy, climate change and tourism; and the linkbetween food and sustainable tourism.

The scenario model shows that, all in all, anambitious climate policy can be combined with risingprotability in the tourism industry and an increase inthe number of foreign tourists coming to Norway. Animportant point here is that all the various global socio-economic development and climate policy scenarios willlead to a two-fold increase in both the number of interna-tional tourist arrivals and protability. SDN neverthelesspoints out that stronger measures will be needed to

reach the goal of a more sustainable tourism industry.

Pilot project Sustainable Tourism 2015Innovation Norway plays a key role in helping the Nor-

wegian tourism industry to become more sustainable.Innovation Norway has been mandated to developsustainable tourism goals and initiatives, performanceindicators and pilot schemes. The framework for thiseffort is Sustainable Tourism 2015, an initiative in

which Innovation Norway has invited the tourism in-dustry to participate in a process to further dene andoperationalise these goals. At the same time trials areunderway at ve selected destinations (Trysil, Rros,

Vega, Lrdal and Geilo Fjellandsby). These destina-tions are working to identify appropriate goals andmethods for greater sustainability. These pioneers aredemonstrating how the Norwegian tourism industrycan focus on sustainability, and as a group convey thatthe industry is taking responsibility for the local com-munity, culture and environment. The sustainabilitypilots will run until the end of 2012.

Trysil (Hedmark) aims to transform itself from a

strong winter destination into a year-round destinationfocusing on sustainable development in the areas ofnature, culture and the environment, infrastructure

and competence. In the summertime the Trysil coun-tryside has many outstanding qualities that may bedeveloped and thus exploit vacant capacity.

Lrdal (Sogn og Fjordane) aims to extend the seasonand resolve challenges such as pollution and the pres-ervation of the areas natural and cultural heritage fortourists and residents alike.

Rros (Sr-Trndelag) wants to use environmentalcertication of tourism companies as a tool forincreased sustainability, and will implement new initia-tives to reduce the industrys environmental footprintand increase its protability.

Vega (Nordland) is focusing on nature-based experi-ences, and will use an impact assessment to underpin

the design of activities for tourists. The local authorityalso plans to develop its own commercial concepts andis focusing on developing its role as host.

Results from industry conferences organised aspart of the Sustainable Tourism 2015 project,Innovation Norway (2010)Six tourism industry groups held a series of meetingsin 2009 to discuss what it would take for them tohelp move Norwegian tourism in a more sustainabledirection. Over the course of the process the industrygroups developed a set of specic proposals. A moresystematic focus on the environmental certicationof tourism companies, competence-enhancementprogrammes, development funds for sustainable tour-ism, as well as national and segment-specic indicatorsto monitor the tourism industrys sustainability weresome of the measures proposed.

Pilot project Voluntary funding of collectivebenetsMeasure no. 54 of the national tourism strategy entitledValuable Experiences from 2007 states that: The

government accepts that Innovation Norway maycontribute nancially to one or more projects whosefunding includes voluntary funding of collective ben-

Photo: Vierli Turistsenter


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ets. In October 2008 Innovation Norway announcedit was seeking destinations to participate in a three-

year project to follow-up measure no. 54 through theestablishment of a scheme for the voluntary funding ofcollective benets. 42 applications were received, vepilots were selected and initiated. These were in Trysil,

Stryn and Nordfjord, Valdres, Narvik and Lofoten. The object of the project is to establish a voluntaryscheme for the funding of collective benets. Thepilots must dene the collective benets in question,dene who is to fund the scheme, set up an organisa-tion to administer the scheme, test and evaluate thescheme, and, nally, put the scheme into operation.

The project will be concluded at the close of 2012.

Narvik 20,000 inhabitants, 77,000 commercialovernight stays. Prioritised segments are round trips(individuals and groups), courses and conferences(preferably spiced up with activities/experiences),skiing (spectacular opportunities for skiing in the mid-dle of town) and the cruise market.

Trysil almost 7,000 inhabitants. One of Norways larg-est winter sports destinations, with 900,000 skiing days.

A total of 370,000 overnight stays in commercial accom-modation, 800,000 overnight stays in private holidayaccommodation. Tourists spend an estimated NOK 800million, of which the retail sector, hotels/restaurantsand miscellaneous service providers each receive

about NOK 230 million. A substantial 46 per cent of theemployed population work in the tourism industry.

Nordfjord around 3,000 inhabitants. Classic fjorddestination, with summer tourism linked to countrysidepursuits. Almost 300,000 overnight stays, of whichabout 125,000 in hotels and 100,000 at camp sites.Foreign visitors account for 30 per cent of the overnightstays. Tourists spend approx. NOK 600 million, NOK150 million of which goes on accommodation, NOK 150million is spent in the retail sector and around NOK 120million in restaurants/cafes/bars.

Valdres 6 local authorities, just under 18,000 inhabit-ants, and almost as many holiday homes. Commercialtourism primarily at Beitostlen. The number ofovernight stays per year estimated at 2.5 million, about600,000 of which in commercial accommodation, theremainder in holiday homes. Tourist spending totalsNOK 1.2 billion per year, almost NOK 500 millionof which goes to hotels/restaurants and the sameamount to retailers.

Lofoten 6 local authorities, around 25,000 inhabitantsand 600,000 overnight stays per year (incl. free camp-ing). An icon in Norwegian tourism, but also known

internationally. The destination in Nordland with thehighest number of overnight stays by international

visitors. According to gures from 2004, Lofoten wasalso the region in Nordland with the highest spendingrate per overnight stay.

Pilot project Comprehensive package dealsOn 11 September 2009 the Ministry of Trade andIndustry granted four pilot projects NOK 600,000 eachto fund the development of a comprehensive tourismpackage in their specic regions. The pilot projects Comprehensive package deals in Oslo Fjord, The best ofthe Arctic, Finse 1222 Visit Rallarvegen, and Completeexperience of Helgeland were concluded in 2011.

The objective of the pilot projects was to encouragetourism companies to work together to create attrac-tive package deals for tourists. In choosing who wasto receive nancial support the ministry gave priorityto those projects that would be able to build a broadregional network of collaborating entities. A broadcollaborative effort provides great potential for thecreation of additional year-round jobs in an industrythat is highly seasonal. It was also important that theprojects were capable of putting their own region onthe map of Norway, and Norway on the world map,and that the nancial support could have a lastingimpact not only for the recipients, but for other partsof the tourism industry as well.

Finnmark Reiselivsklynge The best of the Arctic The project is intended to develop and establish

destination-specic and round-trip packagesthroughout Finnmark.

Finnmark Reiselivsklynge is an alliance betweenRica Finnmark AS, Nordkapphallen, Spmi Park,Incoming Kirkenes, Via Alta Tours, Hurtigruten

AS and Sorrisniva AS. These companies will invitelocal service providers throughout the county toparticipate in the packages being developed.

Opplev Fredrikstad AS Comprehensive packagedeals in Oslo Fjord The project is intended to develop and establish

experience packages to ensure that domestic andforeign tourists who come to Oslo also visit otherplaces within the region.

The project is being carried out as an alliance be-tween the county councils around Oslo Fjord, VisitOslo, Visit Follo and Opplev Fredrikstad (owned bythe local authorities and retailers in Fredrikstad),

with the regions local companies providing theservices included in the packages.

Finse 1222 Visit Rallarvegen The project is intended to develop and integrate the


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regions characteristic features: snow/ice, fjordsand mountains. The Rallarvegen trail throughBuskerud, Hordaland and Sogn og Fjordane is usedas a starting point for a raft of different experiencesand the link between them.

The project is being carried out as an alliance be-

tween hospitality service providers and tour/activityorganisers along the Rallarvegen trail, as well as thenational railway company NSB and other relevanttransport companies.

Polarsirkelen Reiseliv Complete experience ofHelgeland! The project is intended to develop, market and sell

complete themed packages and round-trips in the ex-tremely varied Helgeland region. These include island-hopping by bike, hiking The Great National ParkRoute, sea-shing and around the coast by kayak.

The project is being carried out as an alliancebetween the regions three destination managementbodies, Polarsirkelen Reiseliv, HelgelandskystensReiseliv and Destinasjon Helgeland AS, and alsoincludes a number of local hospitality, experienceand transport service providers.

Trial project Tourism Development CentreMany of those who currently work in the tourismindustry during the high season are unemployed andreceive unemployment benets from the Norwegian

Labour and Welfare Administration (NAV) during theperiods when the tourism companies do not have thenancial wherewithal to keep them employed. This isan unsatisfactory situation for the individual employee,since it results in an unpredictable working life andlittle personal development. It is also unsatisfactoryfor the companies themselves because it leads to anunstable workforce, poor motivation and inadequateopportunities to increase staff competence.

A trial project has been established as a partnershipbetween the local authority, the tourism industry andNAV. The objective is to obtain a higher return on thepublic funds that are spent each year on unemploymentbenets for seasonal workers in the tourism industryin order to reduce the number of people unemployedduring the industrys low season. The trial projectis developing a model for a Tourism DevelopmentCentre, and a model for how those made redundantcan be used to perform tasks that may be considered ofcollective benet to the tourism industry.

Tourism companies enter into a permanent employ-ment contract with an individual, but the tasks thatemployee is to perform for the company are seasonal.

At the end of the season the employee is transferred to adevelopment centre, which is responsible for keepingthem occupied by means of attendance at training cours-

es that meet the company/industrys needs, or throughexperience of working in another business operation. Atthe start of the season the employee is transferred backto his or her own employer. This scheme would giveemployees both job and earnings security, relevant com-petence enhancement and stronger ties to the industry.

Four trial projects have been initiated to test thisnew partnership model. Since the four projects en-compass different challenges they will overall providea reliable indication of whether this is a model whoseroll-out to the rest of the country should be encouraged.

Trysil A winter destination that faces major chal-lenges with respect to the sizing of both its transportinfrastructure and health services. The district hasa great many seasonal jobs linked to tourism in the

winter season, and recruits many young people fromSweden, for example. The large proportion of seasonal

workers represents a challenge for tourism companies with regard to competence development and stability.

Vgan Primarily a summer destination, but is cur-rently developing a winter programme, for which thereis growing demand. A large proportion of seasonal

jobs in the tourism industry. Few alternative jobs within reasonable commuting distance of the district.Challenges are linked to competence enhancementand year-round operation of tourism companies.

Lillehammer Both a summer and winter destination,but since many tourism companies operate seasonally,the challenges associated with seasonal workers arenevertheless present. There are good opportunitiesto try out year-round working in the tourism industry,but this would involve working at different companies.Proximity to the research environment at Lilleham-mer Knowledge Park gives this trial project an addeddimension.

Hemsedal Primarily a winter destination, but effor tshave recently been made to develop new products thatmake Hemsedal an attractive year-round tourism desti-nation. A large number of seasonal workers move intothe Hemsedal district during the high season and stayon through the rest of the year despite having no work.

This creates a large number of unemployed tourism-industry workers, and consequent challenges for NAV.

International cooperation The Ministry of Trade and Industry is a memberof the United Nations World Tourism Organisation(UNWTO) and the OECDs Tourism Committee, and

has entered into a cooperation agreement with Russiastourism authorities. The Ministry of Trade and Indus-try also works extensively with its Nordic counterparts.


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2 Developments and key trends inthe tourism industry

The tourism industry is growing both in Norway and worldwide.

Increased private purchasing power, more leisuretime, cheaper transport and increased internationalisa-tion are some of the trends that affect the tourismindustry.

Sections of the Norwegian tourism industry focussolely on a local, regional or national market. Otherparts of the industry operate in a global market. It is

therefore vital for companies to be competitive bothnationally and globally. Mobility is increasing, andglobal competition is growing steadily more intense.Information about developments and trends in de-mand is extremely important for Norwegian tourismcompanies ability to provide tomorrows market withattractive products.

Norway is a high-cost country. The tourism indus-try is special in that it is labour intensive and dependson a large number of employees often having directcontact with customers. The quality of the product be-ing sold is therefore highly sensitive to the employeesqualications.

Norway is a diverse country, and the experiences which can be offered to guests in the various partsof the country vary considerably. This represents asignicant opportunity for Norway as a destination,since we have the chance to tailor experiences to manydifferent customer groups. Evidence suggests that

willingness to pay is highest for tailor-made experi-ences.

We must, however, acknowledge that the develop-ment of Norways tourism industry has not been

adequate. A huge effort from all concerned is requiredto justify the tourism industrys continued place as anarea of particular focus in the future.

Tourism is affected by trends at both the macro andmicro level

Economics

Politics

Technology

Information/media

Environment/nature

Values

Demographics

Destination/organisation

Substitutes Legislation

SuppliersCustomers

CompetitorsMarkets

2.1 Global developmentsIn 2010 the number of tourist arrivals worldwide roseby 7 per cent. Although all parts of the world sawan increase in 2010, this rise was strongly driven bydeveloping countries. Growth in Europe was unevenlydistributed. The gures for 2010 show that the numberof tourist arrivals in Northern Europe fell by 0.1 percent. For 2011 the estimates indicated an overall globalincrease in the number of tourist arrivals of 45 per cent.


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P h o t o : N i l s -E r i k B j r h ol t / www .vi s i t n or w a y . c om


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Norwegian and international tourist arrivals

Percentage change from the year before

10%

0%

-2%

-4%

-6%

6%

4% 4% 4%

-2%-3%

-1% -1%

-4%

8%

10%

9%

11%

0% 0%1% 1%

2%

5% 5% 5% 45%6% 6% 6%

7% 7%

3% 3% 3% 3%

2%

8%

12%

96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 Forecast

2011

Year

International tourist arrivals(global average)

Foreign tourist arrivalsto Norway

Tourist arrivals with at least one overnight stay. Preliminary gures for 2010.Source: World Tourism Organization (UNWTO)

11 September 2001:al-Qaeda terrorist attackon the USA. Over 3,000fatalities. Financialdownturn followsin its wake.

2003: USA invades Iraq.SARS epidemic in Asia. 506 people died during the month of May.The epidemic much less severe by July.

11 March 2004: Bombing of Madrid trains.191 fatalities.

July 2005:Suicide bombing on theLondon Underground.56 fatalities.

1997: Financial crisis in Asia.

From mid-2008: Globalnancial crisis.

April 2009:Swine u(H1N1 virus).

April 2010:Volcaniceruptionin Iceland.

Norway captures market shareFigures from the World Tourism Organization (UN-

WTO) show that the number of tourist arrivals in Nor- way rose by 9 per cent in 2010. Norways share of thetourist trafc in Northern Europe also rose by 9 percent in 2010. During the same period Norways shareof the market among the so-called mature economies,

such as Japan, Canada and Germany, rose by 3 percent (Source: UNWTO).

Over the past decade Norways share of the touristtrafc in Northern Europe has risen by 24 per cent,

while Norways share of the market among matureeconomies has risen by 28 per cent.

2.2 Developments in NorwayComposition of commercial overnight stays

The bulk of Norways tourism industry caters forthe domestic market. From 2005 to 2010 commercialovernight stays made by Norwegians in Norway hasaccounted for a relatively stable 70 per cent or so ofmarket share, though this gure is tending to rise

slightly (72 per cent in 2010).

Commercial overnight stays bynon-Norwegians

The composition of commercial overnight stays madeby non-Norwegians has remained relatively stable inrecent years. Germany is the most important foreignmarket, followed by Sweden and Denmark. In 2010

these three markets accounted for 43 per cent of allovernight stays made by foreigners in Norway.

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

0%

2%

4%

6%

8%

10%

2000

Tourist arrivals with at least one overnight stay. Provisional gures for 2010.Source: World Tourism Organization (UNWTO)

2005 2007 2008 2009 2010

Tourist arrivals in Norway Market share in Norway

7.14%

0.75% 0.86% 0.89% 0.89% 0.93% 0.96%

7.24%7.53% 7.71%

8.14%8.88%

Arrivals

Share of the market in Northern Europe Share of the matureeconomies market

0

5 000 000

10 000 000

15 000 000

20 000 000

25 000 000

69

70

71

72

73

70

71

72

73

2005 2006 2007 2008 2009 2010

In Norway Abroad Market share

70

71

70

71

73

72

Commercial overnight accommodation includes overnight stays at hotels, camp sites,holiday villages and youth hostels.Source: SSB

Commercial overnightaccommodation

Percentage of overnightstays by Norwegians


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Rural hotels as a group have a negative bottom line

Operating prot in % Total Urbanhotels

Ruralhotels

Airporthotels

Net sales revenues 100% 100% 100% 100%Operating expenses 68.0% 66.6% 78.7% 59.3%Operating prot 2 32.4% 33.8% 21.8% 40.7% Total xed costs 28.2% 29.5% 22.5% 30.7%Operating prot/loss 3 3.9% 4.3% -0.7% 10.0%

Operating prot 2: Prot before rental and nancial costsNorwegian Hospitality Industry 2011, Chapter 3

Source: Travel survey, 4th quarter 2010. SSB

0

4 000 000

8 000 000

12 000 000

16 000 000

2 000 000

6 000 000

10 000 000

14 000 000

0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009 2010

Total no. of holiday trips Percentage of holiday and leisure trips in Norway

Holiday and leisuretrips in Norway

Holiday and leisuretrips abroad

Percentage of holiday andleisure trips in Norway

77%71% 71% 69%

63% 65% 67% 66%

Falling demandrural hotels = fall in RevPAR

Breakdown of commercial overnight stays made by non-Norwegians

No. of overnight stays by foreign guests

Source: SSB

0

Rest of Europe

Denmark

UK

USA

Germany

Sweden

Netherlands

France

Spain

Italy

Rest of Asia

China

Poland

Russia

Japan

South Korea

200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 1 600 000 1 800 000

201020092008

Uneven distribution of the tourist traffic As previously mentioned Norway has increased itsshare of international tourist arrivals in the last decade.However, this growth is unevenly distributed acrossthe country. While urban areas and their surroundinghinterlands are succeeding competitively, certain ruralareas are struggling in the market. This development

may be putting some companies offering overnight ac-commodation in particularly out-of-the-way destinationsin a precarious position. The gures below illustrate thesituation for the countrys rural hotels in more detail.

Norwegians on holidayFigures from Statistics Norway show that Norwegiansmade 17.55 million holiday and leisure trips in Norwayand abroad in 2010. This is a rise of 4 per cent from2009. The number of holiday and leisure trips abroadincreased by 9 per cent, but this rise must be seenin light of a 7 per cent decrease in 2009. The numberof holiday and leisure trips within Norway rose by 2per cent in 2010. However, the extent to which Nor-

wegians are holidaying in Norway is falling. In 2003domestic holidays accounted for 77 per cent, while thishad dropped to 66 per cent in 2010.

Norwegians are also spending far less money onholiday and leisure travel in Norway than abroad.

Although Norwegians spent 49 per cent more onholidays in 2010 compared with 2002, the increase corresponding to NOK 25 billion has for the mostpart gone on foreign holidays. Norwegians spendingon holiday and leisure trips in Norway rose by 13

per cent, which corresponds to the general level ofination during the period. In contrast, Norwegiansspending on holiday and leisure trips abroad rose by74 per cent.

Falling occupancy rates produce a weaker RevPAR.Source: Norwegian Hospitality Industry 2011.

200

300

400

500

600

2000 2001 2002 2003 2004 2005 2006 2007 20092008 2010

Urban hotels Rural hotels


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Northeast Asia will be the most visited region in 2030

203020101980

Middle-EastAmericasAsia and the PacicEuropeAfrica

41%51%7%

8%

14% 30%22%

16%

6%6%

3%3% 23%

8%

63%Source: World Tourism Organization(UNWTO) 2011: Tourism Towards 2030

050

100150200250300

N o r t h - E a

s t A s i a

S o u t h

e r n / M

e d i t . E

u .

W e s t e r n

E u r o p

e

S o u t h - E a

s t A s i a

C e n t r

a l / E a s t e

r n E u

r o p e

M i d d

l e E a s t

N o r t h A

m e r i c a

N o r t h e r n

E u r o p

e

S o u t h A

m e r i c a

N o r t

h A f r i c

a

E a s t A

f r i c a

S o u t h

A s i a

C a r i b b

e a n

S o u t h e r n

A f r i c a

C e n t r a l A

m e r i c a

W e s t a

n d C e n t r a

l A f r i c

a

O c e a n

i a

International tourism by (sub)region of destination 203020101995Source: World Tourism Organization(UNWTO) 2011: Tourism Towards 2030

2.3 Key trends globally and in NorwayOther changes are also affecting the tourism industry.Demographic changes are one example of this. Areport prepared by the European Travel Commission(ETC) and UNWTO shows that the worlds population

will increase from 6.9 billion in 2009 to 8.3 billion in2030. Population growth will be strongest in China andIndia. At the same time the number of inhabitants inEurope is expected to fall by 1 per cent. Demographicforecasts indicate that the average age in Europe willrise, while it will remain low in Asia.

UNWTO gathers data for international touristarrivals. In 1995 Europe and America together ac-counted for 78 per cent of all arrivals. This share hadfallen to 66 per cent in 2010. Destinations in the Asia/Pacic region have, in particular, captured a largershare of the international tourist trafc. Projections foreconomic development in various parts of the worldshow that the Asian countries will probably becomerelatively more important for Norwegian tourism des-tinations in the years ahead, both as source countriesand as competitors.

Sustainable development is high on the politicalagenda in large parts of the world. Interest in sustain-able tourism is growing among both service providersand customers, as evidenced by the level of interestin environmental certication at visitnorway.com.

Norway is well placed to develop its tourism industryin a sustainable direction, and systematic efforts inthis area have been made since the previous tourismstrategy was launched in 2007. The environmentalcerticates we encounter most often in the Norwegiantourism industry are the Nordic Ecolabel (Swan),Environment Beacon, ISO 14001 and EcotourismNorway. All four organisations report growing interestin their certication schemes.

It is important that such global trends are taken intoconsideration in connection with product developmentand the marketing of Norwegian tourism products.

New record for tourist traffic, but growth notevenly distributed

Tourist arrivals totalled 935 million in 2010, accordingto gures published by UNWTO. This is the highestlevel of trafc ever recorded, and represents a rise of7 per cent from 2009. Although all parts of the worldreported a rise, growth was largely driven by develop-ing countries. With a modest 3 per cent rise, Europe isthe region that is struggling hardest to recover fromthe nancial crisis. During the same period the total

number of arrivals to Northern Europe fell by 0.1 perAsia and the Pacic, Middle-East and Africa are growing


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cent. The trend in the past decade has been for North-ern Europe to lose market share to Southern Europe,

while Europe and America have lost market share tothe rest of the world.

Budget airlines, whose business models have

slashed the cost of ying, have radically changed theair transport sector in recent years. This has also putpressure on traditional airlines to cut fares. The num-ber of routes has risen sharply, and good ight connec-tions are one of the most important success factors formany destinations. Budget airlines have also includednew destinations in their schedules.

Attracting consumers attention in the internationalmedia environment is a challenge. Among otherthings, Norway is competing with new and exoticdestinations available at relatively reasonable prices.

While many developing countries can point to solideconomic growth after the nancial crisis, several ofthe mature economies are struggling to cope with se-

vere debt problems. Considerable uncertainty attachesto economic developments in many of Norways mostimportant markets, such as Germany, Spain, the UK,France and the USA.

Consumption after the nancial crisis Average spending per holiday has not picked up againafter the nancial crisis. In fact Euromonitor Interna-tional claims that the average spend will not increase

until 2015. This is a global average, with substantialregional differences. North America, together with

Asia and the Pacic countries, are the areas that willbenet from an increase in the amount tourists spend.

During the nancial crisis we saw a change in peo-ples travel patterns. At that time many people electedto take shorter holidays at destinations closer to home.Low prices were important. There are strong indica-tions that this pattern of consumption has changed afterthe nancial crisis. The new aspect is that expensiveand non-expensive elements are being combined. Manypeople may choose to y with a budget airline and thenstay at a 5-star hotel. Figures from Euromonitor Interna-tional show that demand for luxury hotels has risen.

In our neighbouring markets, which are also themost important markets from a volume point of view,the economic situation remains dominated by debtcrises and economic uncer tainty, a situation that looksset to continue for some time to come.

The experiential economyIn several areas we are seeing a move towardsincreased individualisation and greater freedom of

choice with respect to lifestyle and consumption. Thetrend towards greater prosperity and higher levels ofeducation leads to a stronger demand for and willing-

ness to spend on culture, new experiences and travel.In response to such development trends the tourismindustry can seek to create a set of experiences in

which content, authenticity and communication forma unied whole. The experiential economy is about

meeting the needs of the tourists. The need to be sur-prised, entertained and delighted is satised throughexperiences. Entertainment, culture and the artsbecome more important.

New information and distribution channelsdemand new types of competenceIn a short pace of time the internet has become animportant tool for tourist information, the distributionof tourism products and contact between customersand companies. The importance of social media isgrowing steadily.

Constantly improving broadband access, mobilenetworks and smart phones have formed the basis fora whole host of new applications within the tourismindustry, particularly with respect to the distribution ofinformation. This changes the way many people taketheir holidays. Where tourist information used to beprovided before the trip started or at a tourist informa-tion ofce along the way, many people now expect tohave access to updated and reliable tourist informationat all times during their trip. On the one hand thisaffords opportunities to provide more focused tourist

information through location-based services. On theother hand this requires much more frequent updatesof location-relevant product information.

An associated trend is that tourism products areincreasingly being sold through online booking ser-

vices. In the same way as above, this requires that theproduct information provided by the various destina-tion and booking services is as up-to-date and reliableas possible. The growth in popularity of this kind ofservice is also increasing expectations that an everlarger number of elements relating to the trip may bebooked online everything from ights and accom-modation to activities and experience-based products.

Interactive online services and social media makeit easier for customers to make direct contact with theproducers of tourism products. Many tourists chooseto use the internet to voice their opinion on the tour-ism products they have tried out. Online consumercomments affect the reputation of the company orproduct concerned. Competence is required to suc-cessfully manage these online services. This develop-ment represents an opportunity for those tourismcompanies that master this method of communicating

with customers, but can also be a challenge for thosethat fail to do so.


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3 Tourism policy goals and focusareas

The tourism industry is a major source of employment

throughout the country. It is an industry that is grow-ing internationally, and the industry at home still hasconsiderable potential to increase the amount of valueit creates. As a small country Norway cannot excelin every area. The government has chosen to focusparticularly on the tourism industry. Underpinning thischoice is the tourism industrys potential for further

value creation, particularly in rural areas, and thenatural advantages Norway has with respect to furtherdeveloping the country as a tourism destination. Thegovernment will therefore pursue a particularly activepolicy in the eld of tourism.

The tourism industry is a highly diverse sector,comprising a large number of small and medium-sizedrms. Common to the vast majority of those engagedin the tourism industry is that what is being sold bythe individual vendor does not by itself represent anall-inclusive product. For customers to get what they

want, the individual products must be combined into acomplete experience. It is often an advantage to a tour-ism company that other similar rms offer servicesnearby. For example, the fjordside restaurant dependson the existence of adequate transport infrastructure/

services; the ski area becomes more attractive if there

are hotels beside the slopes. The individual provider of

tourism experiences will therefore depend on compa-nies that satisfactorily complement their own servicesand quality.

The tourism industrys output must be consumedat the location it is produced. Customers must be con-

vinced that it is worth seeking out the product. Nor- ways landscape and natural beauty may have toppedseveral international rankings of the worlds best traveldestinations, but that does not mean Norwegian tour-ism products are well known internationally. Nor doesit mean that they are more attractive than other coun-tries tourism products, or that they sell themselves.

Like other business sectors, the tourism industryis responsible for its own commercial development.

The governments tourism policy is intended to pointthe way and help enable companies to realise theirfull potential for value creation. Harmonisation ofpublic-administration involvement in the industry

will contribute to effective resource utilisation. Theindustry itself must innovate and create high-quality,all-round products that give visitors an experience they

will value. This presumes close collaboration betweenall parts of the industry and other parties that provide

a framework for tourism experiences.


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P h o t o : S u s a nF r a s er / www .vi s i t n or w a y . c om


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3.1 Active tourism policyIt is important for the government that the active policysteps it takes with respect to the tourism industryare designed such that they can be implementedeffectively and that they help stimulate developmentin those areas where the industry cannot realise itspotential unaided. Only in this way will the goals andinitiatives presented in this strategy remain robust overtime. In 2011 the Institute for Research in Economicsand Business Administration (SNF) carried out asocio-economic analysis of industrial policy measures

vis--vis the tourism industry. The analysis examines whether national, county and local authority industrialtourism policies can be said to have any socio-eco-nomic justication, i.e. that industrial policy measuresaddress some form of market failure. The existenceof a market failure within certain parts of the tourismindustry could prevent the industry from realising itsfull potential for value creation.

The analysis concludes that in an overarchingsocio-economic perspective there does seem to be aneed for the implementation of measures by the publicauthorities to enable the tourism industry to realise its

potential. The analysis does not say which industrialpolicy measures should be implemented and how, butdoes indicate which measures are most likely to assistthe industrys future value creation. The measureslinked to particular areas of focus in the coming chap-ters are largely derived from this analysis.

The Competition Act provides a framework for thekinds of collaborative arrangements it is possible toenter into. As a rule new collaborative constellationsbetween entities which are in principle not competi-tors may be established without coming into conict

with the Competition Act. For example, collaborationbetween entities that offer complementary productsand/or services would be permitted, e.g. between aprovider of overnight accommodation and a companyoffering experiences at the same destination. Theestablishment of collaborative constellations compris-ing entities that complement each other in this way isbroadly in line with the recommendations of severalreports on the background to future tourism policies.

3.2 Tourism policy goals The government wants Norway to be a leading,innovative, dynamic and knowledge-based economy,

with particular emphasis on those areas where weenjoy specic advantages. An active industrial policy isimportant for innovation and change. The governmentfacilitates this through both general framework condi-tions and more focused industrial policy steps.

The tourism industry must change course from theprovision of individual, traditional tourism products,to the collaborative creation of all-round experiencepackages that include transport and accommodation,food and beverages, cultural and natural heritage, andparticipation in activities. Our vision is that by offering

valuable experiences we will create value for visitors,companies, employees, local communities and Norwayas a whole. This requires us to sharpen the focus ofour tourism policy in order to help increase value crea-tion within Norways tourism industry.

3.2.1 Sustainability as a premise The governments previous national tourism strategy,Valuable Experiences , includes the development of

Norway as a sustainable tourism destination as oneof three main objectives. This ambition has nowbeen further reinforced, with sustainability now anoverarching premise in the new tourism strategy. Thismeans that development of Norway as a sustainabletourism destination is a fundamental premise of thegovernments tourism policies.

Sustainable tourism requires that the industrydevelop in a way that supports vibrant local com-munities, good and stable jobs, and nancially viabletourism companies. It also requires that the environ-mental perspective is taken into account. The tourismindustry must assume a share of the responsibility forprotecting our natural heritage and cultural landscapefor future generations, and strive to achieve low levelsof greenhouse gas emissions and waste from its opera-tions. The government builds its understanding of theterm sustainable tourism on three equally importantpillars: the environment, social responsibility and prof-itability. All three aspects must be addressed for tour-ism to be sustainable. Moving forward emphasis willbe placed on nding good indicators for sustainabletourism, so that we can determine the extent to which

developments are going in the right direction. Thiseffort has been initiated through Innovation NorwaysSustainable Tourism 2015 project.


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Sustainability as a premise must mean thatconsideration for the sustainable development of theNorwegian tourism industry guides decision makingand is clearly integrated into all operational areas. Thisalso underpins the specic measures presented laterin this strategy.

3.2.2 Increased value creation, qualitatively goodexperiences and vibrant rural areas

The two other objectives of the governments tourismstrategy from 2007, Valuable Experiences , remain inplace, while a third goal relating to the quality of theexperiences has been added.

Goal 1: Increased value creation andproductivity in the tourism industry

The objective of the governments industrial policies is

the generation of as high an overall level of value crea-tion as possible. The government will pursue industrialpolicies that promote innovative, knowledge-based andenvironment-friendly business activity, providing jobsnationwide.

The governments goal is a signicant increasein the level of value being created by the tourismindustry in Norway. This will in large part have to oc-cur through the strengthening of collaboration withinthe industry and interaction between relevant bodies.Increased innovation and enhanced competencerequires networks and collaboration at all levels. Theuniform marketing of Norway as a tourism destinationmay be accomplished only through close cooperationbetween organisations in both the public and privatesectors.

The level of protability within the tourism indus-try is too low. Increasing the industrys productivityis therefore an objective. The Tourism Billion showedthat the tourism industry received NOK 1.085 billionin public funding in 2007. To reach the goal of in-creased value creation and productivity it is importantthat public funding is allocated in an effective and

targeted fashion.

Goal 2: More year-round jobs and morenancially robust companies, particularly inrural areas

Tourism is an important business sector in ruralareas, and contributes to attractive local communities.However, the tourism industry is strongly affectedby seasonal variations, which has a particular impactin rural areas. The creation of more year-round jobs

would help to increase quality and stabilise rural popu-lation levels and labour resources. It is a preconditionthat both companies and associated jobs are inherentlyprotable.

The challenges posed by the issue of year-round jobs in the tourism industry must be taken seriously.Many Norwegian tourism destinations remain sea-sonal, their customer base large enough to maintaina complete range of services for only a few months

of the year. At the company level this represents achallenge, since the rms entire nancial foundationmust be generated during the course of a brief, hecticseason. Furthermore, it also means that companiesmust spend time and money recruiting and training aconstant stream of new employees, who only intend tostay with the company for a short period. Companiesalso nd that staff competence often is and remainslow due to the temporary nature of their employment.

There are companies that do not wish to operate all year round, and the need for seasonal staff will remain.If the alternative is not to operate a tourism businessat all, it is better to have a few months of protableoperations than a year-round business whose nancialplatform is unsound. The existence of such seasonalplayers, who in sum can offer year-round experiences,may, for example, be crucial to a hotels ability to stayopen all year.

Local communities often nd it challenging whenthe size of the population uctuates signicantly fromone season to the next. At some large tourism destina-tions the population can be several times higher dur-ing the tourist season than at other times of the year.

Under such conditions it is difcult for local authorities

Photo: CH//www.visitnorway.com


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to provide the right level of services. More year-roundtourism jobs would make it more attractive to choosetourism as a career path, would contribute to highercompetence levels among tourism industry employ-ees, and would provide greater population stability attypical tourism destinations.

Goal 3: More unique, good-qualityexperiences that attract more visitors with ahigh willingness to pay

As a tourism destination Norway is characterised bytwo important factors: we have a unique natural herit-age, and we are a high-cost country. These factors rep-resent both a competitive advantage and a competitivechallenge. One of the objectives of the governmentstourism policy is for the Norwegian tourism industryto provide products of a sufciently high quality toattract greater numbers of quality-conscious tourists

who are willing to pay. By supplying high-qualityproducts, Norwegian tourism companies will be ableto justify the price levels necessary to increase theindustrys protability.

The goal must be to use our unique natural and

cultural heritage as the basis for innovation andproduct development, so that we can create tourismproducts that command a high price in national andinternational markets. This is primarily the industrysown responsibility. The public administration can, how-ever, make a contribution by supporting innovation andknowledge-building, collaboration and networking, newmarket opportunities and effective image building.

3.3 Stronger coordination gives betterresultsSNFs socio-economic analysis points out that the tour-ism industry may suffer from a more extensive failureof coordination than is the case in many other businesssectors. The fact that many small players must cooper-ate to develop comprehensive tourism experiencesmeans that many issues must be resolved throughcollaboration between entities with somewhat differentinterests and different owners. If we base our tourismpolicy on this overarching observation, much of itssubstance should aim to resolve the issues relating tocoordination between different stakeholders.

A great many people and organisations in both thepublic and private sectors are involved in the tourismindustry and its development. All these entities mustpull in the same direction if the tourism policys over-arching goals are to be achieved. It is therefore neces-sary to remedy the coordination failure by clarifyingthe allocation of roles, responsibilities and tasks both

within the authorities and various industry players,and between them.

3.3.1 Public sector coordination The responsibilities of many public bodies touch onaspects that are important for value creation by thetourism industry. The coordination challenges pointedout in the socio-economic analysis exist not onlyamong tourism service providers themselves. Bettercoordination of the authorities overall use of resources

vis--vis the tourism industry is just as important asmeasures aimed directly at those engaged in tourism.

The Tourism Billion analysis and the Tourism Man- agement Bodies in Norw ay report by the NorwegianHospitality Associations Structural Committee fromMay 2011 point out that better coordination between

various levels of the public administration could help

P h o t o : T er j eR a k k e / N or d i c L i eA S / www .vi s i t n or w a y . c om

P h o t o : C H / www .vi s i t n or w a y . c om


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to resolve some of the coordination failure experiencedby the industry. Better public sector coordinationcould pave the way for increased value creation byNorways tourism industry. One of the reasons touristscome to Norway is to experience the countrys naturalheritage, and tourism-related value creation based onour natural and cultural heritage can be increased.However, any such enterprise would require close co-operation between a number of government ministries.

Financial support for the tourism industry by thenational authorities comes in addition to the fact that

various ministries and sector-specic public bodies areresponsible for other framework conditions that affectthe overall development of tourism and the tourismindustry. For example, infrastructure and transportpolicies are important for the tourism industry. Sincethe tourism industry is labour intensive, and has exten-sive operations in rural areas, the governments overallrural development policy will impact the tourism in-dustrys development. General framework conditions,such as taxes and public charges, are important for thetourism industry, as for all other business sectors.

The tourism industry deals with many different

public bodies on a day-to-day basis. This may compli-cate the overall picture that it needs to see in order toforge ahead with its efforts to increase value creation.It therefore makes sound industrial policy sense toimprove coordination between public bodies.

3.3.2 Coordination in the tourism industry Compared with many other business sectors in Nor-

way, the tourism industry is fragmented. In its reportentitled A knowledge-based tourism industry , MenonBusiness Economics suggests that the industry isnancially weak and only in small measure knowledge-based. According to Menon, the Norwegian tourismindustry has lost international market share since1970, partly because it has not managed to adaptafter the discovery of oil led to a sharp increase in theNorwegian standard of living and made Norway one ofthe worlds richest countries. Since the 1970s the Nor-

wegian tourism industrys international competitiveposition has worsened. However, due to stronger do-mestic demand and economic growth it has expandedsubstantially in what Menon describes as the protecteddomestic market. Other business sectors which have

experienced similar changes around them, e.g. thesupermarket sector, have undergone several roundsof consolidation and adjustment. According to Menon,

however, changes in the tourism industry have notkept pace with changes in Norways welfare society. The industry has with cer tain important exceptions remained fragmented, nancially weak and only insmall measure knowledge-based.

In its report A knowledge-based tourism industry, Menon suggests that Norways tourism industry mustappreciate that Norway is one of the worlds richestand most expensive countries. To realise the goal ofincreased value creation and productivity, Norwaystourism industry must become more knowledge-basedand innovative. It must be sustainable and build onNorways unique qualities. Furthermore, ownershipof tourism companies must become more professionaland concentrated in fewer hands.

The tourism industry is largely expor t-oriented,and its products sold in a highly competitive market.

The industrys production costs are largely deter-mined by domestic cost levels, which are consideredhigh in the international market. Within the tourismindustry protability varies from segment to segment,

within individual segments and over time. Menonargues in its report that those engaged in tourism de-

velop strategies to increase volume, reduce costs and/or demand higher prices in the market. In Menonsterms the strategies are summarised thus: Industrialisation large-scale and effective logistics

aimed at the price-sensitive mass market. Self-service digital solutions and self-service

concepts to reduce labour intensiveness. Exclusive experiences niche products aimed at

a small but price-insensitive international marketsegment.

3.3.3 Coordination between the authorities and thetourism industrySeveral trend and generational analyses show that theneed for innovation in the tourism industry will growover the next few years, while the level of innovationis lower in this industry than in other service sectors.

Although Norway offers distinctive, high-qualitytourism products, one of the challenges is to packagethem in a way that makes Norway an attractive tourismdestination, available all year round. Furthermore,extending the tourism season, which in turn increasesprotability and value creation within the industry, rep-

resents a substantial challenge for parts of the country.Implementing one or a combination of Menons

strategies is a matter for the individual tourism com-


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pany. As SNFs report A Socio-Economic Analysis of Industrial Policy Measures with Respect to the Tourism Industry shows, the public sector can play a role incorrecting market failure within and in connection

with a business sector. With respect to the tourism industry, for example,

the national authorities can provide support for theestablishment of networks of complementary opera-tions which work together to develop comprehensiveproducts.

Such networks can help to initiate collaborationbetween various entities to develop comprehensiveproducts. Networks will also be able to help resolvepotential conicts of interest between different playersby providing an arena where they can meet to workout the best way to develop comprehensive productsin partnership. This will also increase the probabilityof the various entities nding ways to share out thecosts and revenues associated with such collaborativeprojects.

SNF emphasises that if the tourism industry can besaid to be suffering from a market failure, the failureis one of coordination. Conicts of interest often arise

when different entities must determine how to sharethe costs and revenues deriving from a collaborativeeffort. Such conicts of interests often appear in theform of a failure of coordination.

3.4 New priority areasBased on the goals, premises and desire for coordina-tion underpinning the development of the govern-ments tourism policy, three priority areas have beenselected for its efforts vis--vis the tourism industry inthe time ahead. These areas cover: a more effectiveorganisation of the various entities engaged in andin connection with the tourism industry; criteria forsuccess in the necessary development of products anddestinations; and methods for the sale and marketingof Norwegian tourism products.

Priority area 1: Organisation A great many of the countrys local authorities wishto go in for tourism. That such a high proportion oflocal authorities wish to develop tourism products isgood, but in a national industrial policy perspective it isimportant to take into account that not all investmentsin local tourism activities may be protable. This riskmust be considered, for example, when the develop-ment of year-round jobs is being discussed.

Tourists demand a complete experience, with thepossibility of combining products from various seg-

ments of the tourism industry into a comprehensivepackage. The development of all-inclusive tourismproducts and Norwegian destinations requires thatseparate entities coordinate their efforts. This willallow the Norwegian tourism industry to strengthenits position in the ever more intense internationalcompetition to attract tourists. Such new collaborativeconstellations between entities that already denethemselves as belonging to the tourism industryshould be stimulated. However, it is also importantto include other business sectors so that investmentsmade in these areas can be exploited for the purposesof tourism as well.

Destination management bodies should playan important role in coordinating the industry andthe tourism activities being undertaken at local andregional level. There are a great many destinationmanagement bodies in Norway today. Roles, responsi-bilities and tasks need to be clearly allocated betweenthese organisations.

Increasing the effectiveness of the efforts beingmade and the use of private and public sector resourc-es requires clarication of who should do what, and

who should nance the various activities. A processof this kind must include both public bodies and thetourism industry itself.


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Priority area 2: Experience and destinationdevelopmentFundamentally, Norway as a tourism product is madeup of the positive and valuable experiences beingoffered. The tourism industry itself must take overallresponsibility for the production of these experiencesthrough the development of the individual destina-tions. At the same time this is affected by a largenumber of public initiatives and activities. The govern-ments contribution is to pursue policies which equipthe tourism industry as well as possible to undertake

the necessary product development.Since product development is affected by many

factors it is important to identify the ones that are ofgreatest signicance to the tourism industrys successin this area. The most important critical success fac-tors are: Collaboration within the tourism industry and

between the tourism industry and other businesssectors.

Use of existing infrastructure investments madein other areas of society must be reused in thedevelopment of tourism products.

Competence the employees are the most impor-tant resource for the development of the tourismindustry.

Quality a precondition for Norwegian tourismproducts international competitiveness.

Collective benets agreement on how they shouldbe used and nanced.

Access to capital funding for the good projects. Accessible destinations tourists must be able to

locate the experiences without difculty.

Priority area 3: Sales and marketingNorwegian tourism products compete with a vast ar-ray of foreign tourism products. But before a customercan select a Norwegian service provider and Norwe-gian experiences, they have to know what is available.Marketing is therefore fundamental to customersacquiring any interest at all in considering Norway asa travel destination. Marketing is carried out at severallevels and through a variety of channels. Use of publicfunds to market Norway as a tourism destination hasincreased during the past decade.

International regulations govern the kind of mar-keting that may be nanced through public funds. Themarketing collaboration that currently exists betweenthe tourism industry and the public administration isbuilt on these regulations.

Online solutions have made it far easier to sellexperiences direct to the consumer. Use of online solu-tions is therefore a natural part of any such sales plan.Building relations with tour operators and travel agen-cies is also impor tant. Today, these account for thesale of a considerable volume of holiday experiencesin Norway. For tour operators to recommend Norwayto their customers they must know about Norway andNorwegian tourism products.

Many people have pointed to a short distancebetween product information and the buy buttonfor the same product as a success factor in triggeringsales. Good electronic solutions for booking and pay-ment are therefore vital elements in maintaining andincreasing customer motivation to choose Norwegiandestinations. The booking solution that was launchedon visitnorway.com in 2011 represents a key milestonein the effort to make Norwegian tourism products

hoto: C H/www.visitnorway.com


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Ecotourism in Norway

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