- How do you assess the economic outlook for tourism and hospitality SMEs in OECD countries as we enter the 2025 summer season? What risks and opportunities should we watch closely?
Tourism demand has been resilient in recent years, with the global recovery now approaching pre-pandemic levels. Europe has been leading this resurgence, and recent forecasts suggest this recovery momentum has remained strong – however, the picture varies across countries and uncertainty has risen sharply.
Earlier this month the OECD released its latest Economic Outlook, which showed that global economic prospects are weakening due to a significant increase in economic and trade policy uncertainty. This uncertainty is holding back trade and investment and diminishing consumer and business confidence, while increases in trade costs could potentially push up wage and price pressures.
The OECD now projects that global growth will slow from 3.3% in 2024 to 2.9% in both 2025 and 2026 – with the slowdown expected to be most concentrated in the United States (where GDP growth is projected to decline from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026), Canada, Mexico and China. In the euro area, growth is projected to strengthen modestly from 0.8% in 2024 to 1.0% in 2025 and 1.2% in 2026.
Other challenges include the increasing disruption and impact of wildfires, floods and other events on tourism and ongoing labour shortages and skills gaps. At the same time the sector needs to keep up with changing consumer preferences and the rapid rise of AI, and we must double down on efforts to better balance tourism’s impacts and build liveable destinations where the benefits reach local businesses and communities. These are issues the OECD Tourism Committee is actively working on.
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Labour shortages and skills gaps remain a major challenge. What policy responses have you seen as most effective in supporting SMEs to attract and retain talent in the hospitality sector?
Tourism is a labour-intensive sector that provides job opportunities for people of all ages and skill levels to enter and move around the labour market. However, many tourism businesses continue to face persistent challenges to attract and retain workers, even as labour markets more generally have eased. Businesses in the accommodation and food services sector – which represent roughly half of tourism employment – in particular experience higher vacancy rates.
The positive aspects of jobs in tourism are often lost amid wider attractiveness issues, including working conditions in the sector, which are frequently associated with unstable, low-wage work and anti-social hours. More needs to be done to tackle these long-standing issues make tourism work an attractive choice for workers. There is also a need to anticipate the changing needs of the tourism workforce including those resulting from the green and digital transitions and aging populations.
More innovative and whole-of-sector responses are needed. Our OECD Tourism Trends and Policies 2024 report highlights a range of initiatives and responses – to mention a few: This includes helping tourism SMEs implement new ways of working, including by adopting digital solutions, or helping scale up initiatives like the one in Finland where tourism businesses operating in different seasons co-operate to offer year-round or longer-term employment and retain skilled workers. Linked with this is support for the efforts of industry associations – in Switzerland the Government is providing financial support for a five-point plan developed by GastroSuisse to improve working conditions, upskill workers and entrepreneurs, and make the sector a more appealing option for workers. Wider investment in housing, transport and other services can support workers, particularly in remote or rural destinations. Finally, the private sector can work closely with education providers and governments to support upskilling and better career prospects for tourism workers – Canada’s Future Skills Framework is one example here.
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What steps should governments and businesses take to better integrate SMEs into data-driven tourism strategies, especially as destinations seek to balance growth, sustainability and resilience?
The OECD, through the Tourism Committee and its Working Party on Tourism Statistics, has long highlighted the importance of developing long-term visions for tourism, supported by forward-looking, evidence-based strategies and action plans. Such strategies are needed to adapt to an increasingly dynamic environment. They provide a framework for cross-government coordination to support coherent policy implications. They also help mobilise stakeholders around a common vision for the future of the sector.
SMEs are the backbone of the sector and have an important role to play in shaping and implementing actions to deliver on this common vision for tourism. However, this can be challenging due to their small size and the fragmented nature of the sector. Industry associations help to bring an active and consistent voice on SME issues in policy discussions. Destination management organisations can also play a role in mobilising tourism businesses and reaching a larger number of tourism SMEs in a smaller geographic footprint.
Data sharing platforms can provide SMEs access to information on tourism trends, visitor demographics, and consumer behaviours. The G7/OECD Policy Paper on Artificial Intelligence and Tourism also highlights how AI and other technologies are opening up new opportunities to enhance market intelligence and data use, including for market segmentation and customer profiling, and in turn to develop new products and offer more personalised services to visitors. However, tourism SME need support to understand how to capture and use this data for business decisions. They also need support to make the most of the data available and adopt digital tools like AI-powered data analytics.
