Tourism Policies and the Investment Dynamics of Micro-Level Firms: The Way Forward to Regional Tourism Development? The Case of Portugal

Tourism Policies and the Investment Dynamics of Micro-Level Firms: The Way Forward to Regional Tourism Development? The Case of Portugal

Rui Costa (University of Aveiro, Portugal) and Carlos Costa (University of Aveiro, Portugal)
DOI: 10.4018/978-1-7998-0365-2.ch018

Abstract

The economic, social, and political significance of the tourism sector is unquestionable. Its expression and ability to induce economic development, are increasingly important. However, the tourism sector faces a number of structural problems to be solved. Cases of excessive spatial concentration in certain areas of the territory present different dynamics of tourism growth and development. This chapter analyzes how the investment dynamics of small and micro-sized enterprises in the tourism sector contribute to the qualification, diversification, and improvement of destinations, and reduce the spatial concentration of the investment in major tourist destinations. It is not enough for the tourism sector to create wealth in terms of investment, income, and employment. It is also crucial the sector plays a central role in qualifying, diversifying, and improving the quality of supply.
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Introduction

The tourism sector has been experiencing a big growth and development, establishing itself as one of the fastest growing 'industries' in the twentieth century. Recognizing this favorable environment, it is essential and urgent that governments, from developed and developing countries, attach greater importance and attention to this sector, considering the role that it can play in the economic development, namely in balancing the deficit of the balance of payments, in strengthening regional networks, and in generating an increased yield and dynamics in job creation, because of its multiplier effect.

Given the multidisciplinary and horizontal nature of the tourism sector, it is essential the participation of the public sector in the implementation of tourism policies that set clear guidelines to all stakeholders, directly and indirectly, involved in the industry. The established goals should reflect the 'needs' of the sector, and must be in accordance with the economic, social and environmental goals of the tourist destination, and in line with the national and regional interests of the country (Beritelli et al, 2007; Bramwell, 2005; Brooke, 1993; Davis, Wanna, Warhurst & Weller, 1993; Goymen, 2000; Krippendorf, 1982; Oliveira, 2003; Stevenson, Airey & Miller, 2008; Williams & Shaw, 1988).

The definition of tourism policies is central and the definition of a strategic vision are essential because they aim to mitigate structural bottlenecks in the sector, increase the average daily tourist expenditure and length of stay, and decrease seasonality, through the growth of revenues, the improvement and diversification of the quality of tourism supply, and the attraction of new markets.

In Portugal, according to statistical data provided by National Statistics Board (INE), and considering the Code of Economic Activities that integrate the characteristic activities defined by the Tourism Satellite Account, 99.6% of the companies that comprise the business structure of the tourism sector are small or medium-sized firms, being 96.7% of them micro scale enterprises.

Despite their micro scale, the tourism private sector demonstrates a great vitality and dynamic, and plays a central role in tourism. These enterprises provide the majority of tourism services and activities, and perform most of the investment in the different subsectors that comprise the value chain of the sector. However, the tourism private sector is mainly constituted by small and micro-sized enterprises, which, given their small size and family structure present a set of constraints which hinder their growth and development.

Many studies that have been conducted in this area highlights the main advantages of this type of enterprises in terms of job creation (Costa, 2012; Costa & Costa, 2013; Getz, Carlsen & Morrison, 2004; Wanhill, 2000); destination competitiveness (Jones & Haven-Tang, 2005; Novelli, Schmitz & Spencer, 2005; OECD, 2008); economic development (Andriotis, 2002; Armstrong & Taylor, 2000; Joo & Rosentraub, 2009; Milne & Ateljevic, 2001; Tinsley & Lynch, 2001); creation of business networks (Breda et al., 2005, 2006; Buhalis & Peters, 2006; Costa, 2005, 2012; Ozturk, 2009; Tremblay & Wegner, 2009); effectiveness and efficiency (Audretsch, 1999; Mouzas, 2006), and innovation and entrepreneurship (Buhalis, 2002; Jones & Tilley, 2003).

These advantages offered by micro, small and medium-sized enterprises come from a set of characteristics and specificities that are inherent to them. The ability of owners, to be able to develop special and personal relationships with customers allows for greater loyalty, proximity and personalized service, meeting the specific needs of each client.

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