TOURISM ITALIA 2020 LEADERSHIP, WORK, SOUTH - STRATEGIC PLAN FOR THE DEVELOPMENT OF TOURISM IN ITALY - Tourism Generis

 
TOURISM ITALIA 2020 LEADERSHIP, WORK, SOUTH - STRATEGIC PLAN FOR THE DEVELOPMENT OF TOURISM IN ITALY - Tourism Generis
TOURISM ITALIA 2020
               LEADERSHIP, WORK, SOUTH

STRATEGIC PLAN FOR THE DEVELOPMENT OF TOURISM IN ITALY
                   ROME – 18 January 2013
Prepared by the Working Group of the Ministry for Regional Affairs, Tourism and Sport chaired by Piero Gnudi
comprising of: Massimo Bergami (coordinator), Andrea Babbi, Pier Luigi Celli, Marco Di Luca, Mauro Di
Dalmazio, Calogero Mauceri, Gabriele Morandin, Nicola Pianon, Roberto Rocca, Ignazio Rocco di Torrepadula.

Contributors: Antonio Achille, Alessandro Costamagna, Andrea Falessi, Marco Fanfani, Piero Gallo, Giulio
Leporatti, Marcello Maria Mariani, Gian Luca Marzocchi, Francesco Millo, Francesco Nicotri, Chiara
Orsingher, Antonia Postorivo, Enrica Sighinolfi, Vincenzo Nunziata, Marco Visentin.

This document is based on an elaborate project from The Boston Consulting Group, the contents of which will
be made available on the Goverment website (www.governo.it) and on the institutional websites of the
Department for Regional Affairs, Tourism and Sport.

     © 2013 – Presidency of the Council of Ministers, Department for Regional Affairs Tourism and Sport.

2
1. INDEX

1.    Index                                                            3

2.    Foreword                                                         5

PART ONE: ANALYSIS OF THE TOURISM SECTOR IN ITALY

3.    The role and placement of Italy in Tourism                       7
3.1   The growth of international tourism
3.2   Tourism: an opportunity that cannot be missed
3.3   The competitive position of Italy within international tourism
3.4   The structure and placement of the Italian offer

4.    The fundamental elements of a tourism industry policy in Italy   29

PART TWO: ACTIONS FOR THE DEVELOPMENT OF TOURISM

5.    Collective vision of strategic actions                           35
5.1   Holistic approach to action definition
5.2   Guidelines and potential impact of the Strategic Plan
5.3   Priorities definition

6.    Rethinking the Governance of the sector                          38

7.    A new role for the Italian State Tourist Board                   45

8.    Organising a modern offer                                        53

9.    Bringing the accommodation facilities up to the standard of      59
      international competitors

10.   Transport and infrastructures                                    63

11.   Developing skills at every level of the sector                   67

12.   Attracting international investments                             71

13.   Summary of the actions timing                                    77

PART THREE: THE BEGINNING OF A JOURNEY

14.   Government’s priorities and short-term actions                   83

15.   Conclusions                                                      85

16.   Sources

17.   Methodotological appendix                                        89

3
2. PROLOGUE
Tourism is one of the economic sectors that have registered a considerable increase globally
in the last ten years. In fact, tourists’ expenditure for travel abroad has doubled and it is
forecast that it will increase by 50% in the next ten years. In 2011, more than a billion people
have travelled abroad on holiday.

Italy still retains a prominent role in international tourism, but finds it increasingly difficult to
keep pace with the speed of growth in the sector and tends to lose its market share to its
traditional European competitors, showing an evident loss of competitiveness. However,
tourism represents for our country a significant sector, with an important role in the national
economy and it generates more employment opportunities in comparison to industrial sectors
that are considered as priority.

The contribution of tourism to Italy’s gross national product amounts to over 130 billions of
euros (about 9% of the national production) and the number of people employed in this sector
are about 2,2 millions (one in 10 workers). Tourism is also an expression of a relevant
potential in terms of communication and cultural integration, two important elements in a
world that is ever more global.

Furthermore, tourism offers great opportunities to enhance our extraordinary historic and
artistic heritage, both in terms of the communication of territorial identities and also in terms
of attracting new investments for its conservation and revaluation.

The studies clearly show the critical points of the Italian tourism industry, just to cite some:
governance problems of the sector, extremely fragmented promotional activity abroad and
gradual marginalizing of Enit, small operating companies, limits in being able to offer
competitive tourism products, insufficient infrastructures, inadequate personnel training for
the global market, difficulty in attracting international investments. In the face of these
critical points, the strategic plan proposes some guidelines and pinpoints a relevant number of
actions to take that could rapidly improve the competitiveness of our national tourism sector.

Necessary prerequisite of the re-launch of this sector is a radical change in the approach to the
problems of tourism that no Government has ever put at the centre of its agenda.

Tourism has never been considered as an investment for the development of the Country. A
glaring example: tourism never had a relevant role in the various plans for the development of
Southern Italy presented by various governments.

It is necessary, therefore, to initiate a cultural shift, starting by considering tourism a great
opportunity for the Country and coordinating the necessary efforts to bring to the surface this
hidden potential. The unrivalled wealth of “tourist resources” of the Country should not
induce a naïve conviction that international tourists will continue to arrive spontaneously; in
fact, as demonstrated by numerous researches, international travelers look for an organized
offer and, even if Italy represents for many reasons the most desired destination, often the
final choice rewards other destinations seen overall as more affordable or more “easy”. To
compete in the international tourism market, it is necessary then to comprehend what tourists
really want and be able to offer modern products, taking into account that the tourist
experience starts well before the booking and terminates well after returning home.

4
This strategic plan constitutes the first step to address this evolution with the aim to
consolidate the competitive advantage of Italy and to contribute to the economic development
and the creation of new jobs. According to some conservative forecasts, the actions to be
taken outlined in this plan can result in an increment of approx.30 billions of euros of GDP in
500.000 new jobs within 2020. It is an opportunity that the Country cannot afford to miss and
an imperative responsibility for the future generations.

In addition to the proposed activities, the plan also proposes a new methodology through
identifying a clear direction in which to go using a coordinated approach by all parties,
unavoidable pre-condition to operate efficiently in a global market. Tourism cannot be viewed
anymore as a matter of exclusive interest of merely the sectors directly involved in it.

This plan will be adjourned every two years, its scope encompassing five years, the aim is for
it to become an essential tool for both government institutions and individual operators.

Tourism can give a concrete contribution to our Country to return on the road of profitability
and growth, on condition that the necessary resources will be assigned to this sector and both
public and private operators show a firm involvement in it.

                                                                  PIERO GNUDI

5
PART ONE

    ANALYSIS OF THE TOURISM SECTOR IN ITALY

6
3. THE ROLE AND POSITIONING OF ITALY IN TOURISM

3.1 Growth of international tourism

International tourism is experiencing an assertive, constant and over a long period trend of
growth. This trend was already evident since the 1980s and growth is expected to be sustained
also for the next twenty years to come. In 2011 World Tourism Organization estimated that in
2030 passengers flows will double the amount of tourists so far achieved – from 280 millions
passengers in 1980 they raised to 900 millions in 2010 – to reach 1.8 billions per year.
This implies an expected average growth rate of 4% in the 50 year period (1980-2030).
(Figure 1).

    Figure 1 – International tourism, world

     International tourists (Mln)
     2,000

     1,500

                                            +4%
     1,000

      500

         0
                  1980       1990    2000         2010      2020F      2030F

    Source: WTO

Furthermore, it is necessary to observe that the described growth was spread out all over the
globe, both in terms of inbound and outbound tourism (Figure 2).

By focusing the attention on outbound tourism, it is however possible to see different growth
rates among areas. In particular, with reference to the most relevant areas by dimensions such
as Europe and Asia-Pacific, it is notable that the average growth rate of outbound travelers of
the Asian region for the period 1980-2030 is approximately two times the European one (6%
yearly vs. 3%), hence representing a population of assured interest for the strategies of our
country.

7
Figure 2 – International outbound tourism by region of origin

           Outbound tourists(Mln)
           1,000

             800

             600

             400
                                                                                                1980
             200                                                                                1995
                                                                                                2010
                                                                                                2030F
                  0
                         Africa           America       Asia & Pacific   Europe   Middle East

       CAGR
                           6%                3%              6%           3%          5%
      '80 – '30

    Source: WTO, The Boston Consulting Group analysis

3.2 Tourism: an essential opportunity for Italy

Tourism constitutes a fundamental sector for the economy of the Country for two main
reasons: primarily has a strong incidence both in terms of GDP (about 9%) and employment
(about 10%); it is also a sector, perhaps the only one, where Italy has a strong and durable
competitive advantage in the years to come. However, in other Countries (such as France and
Spain for instance) the contribution of tourism to the economy is larger both in relative and
absolute terms. (Figure 3).

8
Figure 3 – Tourism impact on GDP and employment

                        Tourism impact on GDP, 2011                              Tourism contribution to employment

            Tourism GDP / GDP (%)                                            Jobs in Tourism / Overall jobs (%)
                20                                                               20

                           14.9%
                15                                                               15
                                                                                        12.7%
                                                                                                      10.4%       9.7%
                10                    9.3%           8.6%                        10

                    5                                                             5

                    0                                                             0

                            Sp          Fr             It                                 Sp            Fr         It
    Tourism total
                                                                       Tourism
     impact1 del           160        185             136                                 2.3          2.8        2.2
                                                                     contribution
       Tourism                                                      (Milions of jobs)
      (€ Billion)

       1. Total impact of Travel & Tourism (includes direct, indirect and induced impact)
       Source: World Travel & Tourism Council (WTTC) –Travel & Tourism Economic Impact 2012

In addition, in the past years the Italian tourism sector has lost its market share in the global
scenery: from prime position within the European countries at the beginning of the 1980’ and
carried up to the half decades of the 1990’, today holds only the third position (behind Spain
and France). A certain decrease of the market share can be considered acceptable, especially
in relation to the growth of the extra European markets, but for Italy the decrease has been
higher if compared to its direct competitors. (Figure 4).

9
Figure 4 – Inbound tourism market share evolution

                                             Inbound tourism market share (Tourism expenditure)
                                                for major European countries, %, 1982 - 2010

                       10
                                                                                                     ∆ market share
                                                                                                      2010 vs. 1982
                         8
                                                                                                           %
                                                                                               Spain     (1.3)
                         6
                                                                                               France    (1.9)
                                                                                               Italy     (3.7)
                         4
                                                                                               Germany   (1.1)
                                                                                               UK        (2.3)
                         2

                        0
                     1982        1985          1990          1995          2000      2005   2010

     Source: "Quindici anni di turismo internazionale dell'Italia" – Bank of Italy

When talking about this sector it is important to remember that the trend of International
tourism will continue to be positive because it is dragged by demand of those economies with
a high growth rate, whose role will be even more significant for both outbound and inbound.
The role of Europe in the sector is therefore destined to reshape and it is today very important
for Italy to defend its own market share and win over shares of international travellers coming
from Countries in rapid expansions. and, even though at present their figures are not yet
significant, they are destined to be within a short period of time, growing together with the
economies of their Countries.

With this foreword, it is important that the Government decides to put at the centre of its
agenda a series of selected strategies for the development of tourism, by recognising its top
role for the growth of the Country. The realization of this Strategic Plan represents, as a
consequence, a unique occasion for the entire sector and in particular for the South of Italy.

Italy has in fact an enormous unexpressed potential, mainly in the South. For instance, by
comparing the tourism development of the Balearics with Sicily, some concerning evidences
emerge. The two territorial realities have a coast extension in Km very similar but the
Balearics generate a number of European night stays eleven times higher than Sicily. The data
is even more disconcerting if we consider the historic, artistic, cultural and gastronomic
heritage of Sicily compared with the Spanish Islands (Figure 5).

With this data, given as an example, it is possible to realize the number of occasions lost by
Italy and so the necessity to recover the competitiveness, without further time to be wasted.

10
Figure 5 - European international tourists in Baleari Islands and Sicily

                                    Baleari Island                                                                               Sicily

              Millions of nights                                                          Millions of nights
              50                                                                          50
                                             41.2
              40                                                                          40

              30                                                                          30

              20                                                                          20

              10                                                                          10
                                                                                                                             3.7
               0                                                                            0
                                             2010                                                                            2010

                         Shoreline km ~1.430                                                     Shoreline km ~1.500

     Source: INE (Instituto Nacional de Estadistica) Encuesta de ocupaciòn hotelera 2000 e 2010; ISTAT; The Boston Consulting Group analysis

     Figure 6 - Low cost flights from Germany to Spain or Italy during an average
     summer week (July 2012)

          Low cost flights from Germany to Spain                                       Low cost flights from Germany to Italy
                 Week:16th-22nd July 2012                                                    Week:16th-22nd July 2012
                         Overall low cost flights: 522                                          Overall low cost flights: 260

                                         3                                                                                                 4
                                                                                                               40
                                                    3

                3
                                                                            30                                                                       3
                                                                                                                                               36
                                                                       86
                                                                                                                                          13
                         12
                                                                                                                                                4
                                                             6                                                                                       3
                                                                                 12
                                                                                                                    19
                                                         10                                                                                                  4
                                                                                 191

                                                                                                                         3

                         2                                        20   Baleari                                                                                       15
                                                                                                                                     51
                    14                                  16
                                                                                                                             6
                                                                                                     11                                         12

     21
                                              28
                                                    2
                                                                 Overall flights to
                                        10
                                                                     Baleari:                                                                            6

                                   25
                                                                            223                           13
                                                                                                                                     3

             Canarie          28                                                       Overall flights to                                                        6
                                                                                                                                 8

                                                                                           Sicily:
                                                                                                17

     Note: included carriers are: RyanAir, easyJet, AirBaltic, Belle Air, Flybe, Germanwings, IcelandAir, Intersky, Jet2, JetAirfly, NIKI,
     Norwegian Air Shuttle, OnurAir, PegasusAirlines, SmartWings, SunExpress, Transavia, TUIfly, Vueling, Wizzair, XLairways, Air Arabia
     Egypt, WindJet. Source: OAG database, The Boston Consulting Group analysis

Continuing with the example, in order to evaluate the structural weakness factors of the
Italian tourism industry, it is interesting to further analyze the differences between Sicily and
the Balearics, considering the flights connections (Figure 6); well, by considering a “typical
week” in the summer season, low cost flights from Germany (the most relevant European
nation for outbound tourism) directed to the Balearics are about 13 times higher that those
directed to Sicily.
11
International travellers are extremely important for the Italian tourism sector because
represent the engine for growth as internal demand is destined, in the best case scenario, to
remain stable or to grow at very contained rates. It is a trend that has already happened in the
past: if considering the number of nights bought in hotel as an indicator for tourist demand, in
the period 2005-2010 the number of nights bought in Italy by Italian travellers have grown by
0,3% year on year, whilst those bought by international travellers have grown by an annual
rate of 2,2% (Istat, 2012).

This potential growth rate is very high when considering the intentions of purchasing tourism
in Italy; a recent study shows how a large sample of international buyers has on average
expressed a high intention to increase the business volume in Italy and to intensify the efforts
for developing business relations with Italy. At the same time the same sample of buyers has
highlighted a series of difficulties in the purchasing process of the Italian tourist product, due
primarily to an insufficient organization of the offer.

3.3 The competitive position of Italy in the international tourism scenario

3.3.1. The market context

In order to evaluate the competitive position of Italy it is first of all necessary to define the
boundary of the tourist market in which the Country operates; in this context a competitive
arena has been identified and includes the western European and Mediterranean Countries
(Turkey, Egypt, Tunisia, Morocco, Croazia, Cyprus).

Having considered that in 2010 about 900 millions of international travellers have been
recorded on a global scale, of those about 400 millions have stayed in the competitive arena
of Italy, generating a total expenditure equal to €286 billions (if we remove the expenditure of
Italians abroad the total equals to €270 billions).

For the period 2010-2020 the expected growth of international tourism in Italy’s context
market is 2,9% yearly in terms of number of travellers and 4,8% yearly on expenditure. (table
7). It is relevant to observe how about half of this growth in terms of expenditure should relate
to medium to long haul travellers named geographically speaking, emerging Countries (in
particular the BRIC Countries and from the Gulf) that in the last decade have expressed only
30% of growth.

12
Figure 7 – International tourism expenditure towards competitive arena

                                                                                             2000 – 2010              2010 – 2020F
                      Region of origin               2000        2010        2020F               ∆          CAGR           ∆             CAGR

                                                       (M)         (M)         (M)         (M) (% tot)       (%)     (M)       (% tot)    (%)
                   Western Europe & Med.1 265                     305          365         40        53%    1.4%      60        46%      1.8%
      Short        Eastern Europe          11                      25           45         14        18%    8.4%      20        15%      6.0%
      haul
                   Short haul             276                      330         410         54        72%    1.8%      80        62%      2.2%
                   Russia                               2          11           30         10        13%    20.3%    18         14%      10.1%
                   Gulf (GCC)                           1           2           4           1        1%      7.3%     2         1%        7.2%
     Medium        BIC2                                 3           6           17          3        4%      7.0%    11         9%       11.0%
      - long       North America                       21          21           25         (0)       -1%    (0.2%)    4         3%        1.8%
       haul        Japan                                5           4           3          (2)       -2%    (3.7%)   (0)        0%       (1.2%)
                   Rest of the world                   15          25           40         10        13%     5.3%    15         12%       4.9%
                   Medium – long haul                  47          69          119         22        28%    3.9%      50        38%      5.6%
                   Total                             ~323         ~400        ~528         ~75       100%   2.1%     ~129      100%      2.9%
                   Italy - outbound                   18           23          28           5        7%     2.5%      5         4%       2.0%

                   Overall Total                     ~305         ~376        ~500         ~70       93%    2.1%     ~124       96%      2.9%
                                                                                                                                    51%
                                                                                                                               From emerging
                                                                                                                                  countries
      1. Mediterranean area includes: Egypt, Turkey, Morocco, Tunisia, Cyprus. 2. Brazil, India e China.
      Source: WTO, The Boston Consulting Group analysis

When planning the strategy for the Italian tourism sector it is also necessary to consider not
only how much the travellers of different countries will contribute to the growth of the
competitive arena context, but also the different habits of spending when varying the
countries of origin.

Table 8 clearly shows the existence of strong differences in terms of expenditure among
tourists of different ethnic and geographic origin. From the tourist average spending point of
view, calculated in the ratio between “outbound expenditure” and “outbound departures”
stand out tourists from the Gulf area (about €2500), the Brazilians (over €2000) and the
Chinese (nearly €1500 – excluding the travelling between Cina, Hong Kong and Macao).

As it has been already highlighted, Italy is only the third in its arena context, with a market
share of international travellers of 11% (44 millions), behind France (19% share) and Spain
(13% share). An evaluation of Italy’s competitive position among other countries can be done
by comparing arrivals, even though it is clearly an improper estimate, does not include
spending and finally do not consider travellers in transit. In this calculation, as you can see in
table 9, Italy is never a leader, not for the short haul number of travellers (western Europe)
nor for the long haul (even when including the memorable markets such as Japan and United
States and also the emerging markets such as Russia, China and from the Gulf area).

The emerging picture is that of a situation of relative leadership and most of all,
independently from possible arguments on the punctual interpretation of single indicators, of
a situation of real vulnerability in the short term, against very significant opportunities.

13
Figure 8 – International tourism expenditure in western Europe and Mediterranean

                Average expenditure / Tourist (€)1
                Without travelling expenses to reach foreign countries (2010)

                3.000

                                                                                                          Overall tourists expenditure
                            Gulf2
                                                                                                          (€ 50 B)

                2.000       Brazil

                        China
                      India
                            Japan
                1.000           North
                                                     Germnay
        Mediterranean
           Area3      Russia
                          Eastern
                                               UK                                                                International
                                                                                       Western Europe5
                          Europe                                                                                 outbound
                   0
                                                                                                                 travellers
                        0                 50                 100                 150               200
                                                                                                                 (2010, millions)
                            Short haul         Medium/Long haul            N

       1. Defined as ratio between "Outbound expenditure" and "Outbound Departures”. 2. Gulf Cooperation Council (GCC), includes
       Saudi Arabia, EAU, Qatar, Bahrain, Oman, Kuwait. 3. Turkey, Egypt, Tunisia, Morocco and Cyprus. 4. Includes USA and Canada.
       5. Includes Scandinavia. Note: China does not include flows between China, Hong Kong and Macao; fixed exchange rate for 2010
       (€/$ = 1.3252), nominal values.
       Source: WTO Barometer 2012; The Boston Consulting Group analysis

       Figure 9 – Italian market share on international tourists in western Europe
       and the Mediterranean area

                                                                                         Destination coutries market share2
                                                      West Eur.
                            Region of origin                             Italy
                                                      & Med.1                                #1          #2          #3          Italy
                                                       (Millions)      (Millions)
                      West Europe Affluent3                                                                                      13%     Affluent
         Short                                          305.2            33.0                  21%         15%         11%
                      West Europe Others4                                                                                        10%
         haul
                      East Europe                        24.9            4.3                   21%         17%          8%       17%
                      Russia                             11.3             0.6                  27%         25%          5%        5%
                      Gulf (GCC5)                        1.8              0.1                  35%         16%        12%         8%
                      Brazil                              1.8             0.2                  29%         14%        13%        13%
       Medium
                      India                              1.5              0.2                  25%         19%        13%        13%
        -Long
         haul         China                              2.9              0.1                  31%         17%         11%       5%
                      North America                      20.7             2.9                  19%         16%         14%       14%
                      Japan                              3.6              0.3                  17%         17%         10%       10%
                      Rest of the world                  24.9             1.4                                                    6%
                      Total                             ~400             ~44                   19%         13%         11%       11%
      Note: Russian citizens do not need VISA to go to Turkey
      1. West Europe and Mediterranean are includes Turkey, Egypt, Tunisia, Morocco and Cyprus. 2. Market share considering travelers
      (considering the total amount of international travelers within each region of origin). 3.Families owning at least 250 €k managed by
      banks (Equities, Bonds, Cash & Deposits, ...). 4. Adults, Seniors and Young people. 5. Gulf Cooperation Council (EAU, Saudi Arabia,
      Oman, Qatar, Bahrain, Kuwait. 6. Brazil, India and China
      Source: WTO; The Boston Consulting Group analysis

3.3.2. Global trends

14
In order to understand the competitive reason just described it is also opportune to consider
some trends on an international level. The last decade has in fact highlighted major changes
that have indiscriminately engaged tourism worldwide; they are some global socio-economic
“mega trend” that influence and will continue to influence tourism demand on a global scale.
Our analysis has identified seven of them, grouped in two macro categories:

     A) Evolution in the composition of demand

        1. Growth of the global economy and increase of flights connections
          - New tourist demand from the average emerging class of the RDEs
            (Rapid Developing Economies)
          - Multiplications of routes and frequencies of short and long haul flights also
            thanks to the low cost carriers

        2. Increase of the senior European tourism
          - European population is ageing and needs a targeted, advanced and
            innovative offer

     B) Evolution in the consumer behaviour

        3. polarization of expenditure
          - The affluent component of the worldwide population is increasing;
            consumptions of the affluent segment of travel and tourism are typically
            significant and trading-up type, which means with a willingness to spend
            much in order to satisfy a certain need.

          - In the short haul there is as effect that we may define trading-down and
             trading-up. In other words demand for low cost flights increases and at the
             same time the demand for high level placement also increases; hence it is
            needed a very targeted offer (BCG Global Consumer Sentiment Survey
             2012).

        4. Wellness- Self health
          - Fitness, self health and psychological well being are increasing

        5. Increase of Internet connections
          - Online sales of the unsold, particularly hotels rooms at “unmissable”
            prices (even at peak season)
          - More disintermediation of physical agencies and tour operators in favor
            of direct purchases
          - Consumer opinion/judgement has become crucial for the success of a
            Product
          - The vast penetration of smart phones has amplified the possibility to
            access the contents (“always connected”)
          - Online and social networks presence is crucial to direct the choice

        6. Faster lifestyles
          - More weekends on the short haul
          - Necessity of faster connections
          - Shorter tourist stays

15
7. Looking for the authentic experience
          - custom-tailored trip
          - in search of a tailor made offer, in line with the consumer specific
            interests’(such as golf, wine and gastronomy, wellness)
There are three main phenomena on a global scale worth giving particular attention to and
that demand to be monitored in the future: the increase sensitivity to risks (safety and
healthcare), the reaction to the increasing costs of fuel energy, the attention to environmental
conservation and the respectability of the cultural sites.

3.3.3. Segmentation

In order to define the action plans it has been necessary to identify a strategic segmentation
with the aim to better target the efforts e the resources at disposal. Such segmentation has
been implemented on the context market for Italy in two specific ways: primary and
secondary1.

        A) Primary segmentation

Primary segmentation has been realized following three referral points: the region of origin,
the age group and wealth.

Based on this scheme, 10 main segments have been identified, grouped in two main bands;
short haul and medium-long haul. The primary segmentation obtained is synthetically
described in Table 1.

1The presented analysis presented in this section has been carried out by The Boston Consulting Group
using data provided by the following sources: WTO, Euromonitor, Economist Intelligence Unit, BCG Global
Wealth Research – May 2012, “The Future of Luxury Travel” – Horwath ILTM, American Express Platinum
Survey 2012.
16
Table 1. Primary segmentation
                                                                 %
                                           Expenditure                    Relevant characteristics of
  Segment     Under-segment                                 Over   Over
                                            (€ billion)                   tourists
                                                          segment total
                                                                          They know Italy and it is
                                                                          important to provide them a
              European Western affluent        61          30%     23%
                                                                          specific reason-why for their
                                                                          return
                           Adults              85          42%     32%
              Other                                                       They hardly use tour operator
              Western      Senior              23          11%     9%     (apart from Senior), and rather
Short Haul    European     Young               12          6%      4%     choose Internet
                           Total               120         59%     45%
                                                                          Medium-low spending budget,
                                                                          but with an increasing level of
              Eastern European                  8           4%     3%
                                                                          income. They still have a
                                                                          positive image of Italy
              Others short Haul                15          7%       6%
              Total short haul                 204        100%     76%
                            Russia              8          13%      3%    They are primarily newcomer,
                            BIC                 9          14%      3%    with specific needs to be
              Rapidly       Gulf               4,4         7%       2%    satisfied. They still often use tour
              Developing                                                  operators. They are attracted by
              Economies                                                   Italy but they know little about it.
                            Total              21          33%     8%     Their attention is particularly
Medium-long                                                               devoted to shopping
Haul                       North America       15          23%     6%
                                                                          They know Italy and visit it once
              Mature       Japan               3,4         5%      1%
                                                                          or more during the course of
              Far away     Total Medum-
                                               18          28%     7%     their lifetime.
                           L.
              Others Lond Haul                 24          38%     9%
              Total medium-long haul           64         100%    24%
Total                                          268                100%

 Soon after having presented a definite picture through this first segmentation, the analysis has
 focused on the market share held by Italy on the key segments. The analysis proved how in
 the short haul Italy has a market share in line with its average one. Differently, on the
 medium-long haul Italy appears to be late on the priority RDEs (Gulf and BRIC), with the
 risk to lose the opportunity of fully taking advantage of their future growth.
 It is instead satisfactory, at the moment, Italy’s positioning on the mature economies (Japan
 and North America).

 In order to have important indication in terms of priority segments, it is effective to intersect
 the market share 2010 for every considered segment with the growth in value expected in the
 period 2010-2020. From figure 10 it is clear that, for dimension, average expenditure and
 growth expected for 2020, the priority segments are European affluent, Russians, Chinese,
 Indians, Brazilians (“BRIC”) and Gulf. Evidently, in the definition of actions in the Plan it is
 necessary to keep in mind the needs and the criteria of selection specific for each priority
 segment.

 17
Figure 10 – Tourism expenditure expected growth and current Italian market
     share1 on primary segments towards West Europe and Mediterranean area

                    Expenditure growth '10-'20F (CAGR%)
                    15                  15
                                                                            Indian
                                    Chinese
                                                          26 Russian                 4

                    10                       10
                                                  Gulf3                              East
                                                                                17
                                                                                     European
                             West Europe                                                   North
                     5         Senior                               West Eur.            Americans
                                                               96
                                                                    Affluent4
                                   32                                                      22
                             West Europe 14          101       West Eur.
                                                                                 Japanese
                             Young people                       Adults          4                           Italian market share
                     0
                                                                                                            (expenditure) 2010 (%)
                         0              5                 10               15            20            25

                             Short Haul                              Expected total epxenditure towards the Italian
                                                                     competitive arena 2020F (€20 Bn)
                             Medium-Long Haul

      1. Market share on international tourism expenditure. 2. West Europe and Mediterranean area includes Turkey, Egypt, Tunisia,
      Morocco and Cyprus. 3. Gulf Cooperation Council (EAU, Saudi Arabia, Oman, Qatar, Bahrain, Kuwait). 4. Families owning at least
      250 €k managed by banks (Equities, Bonds, Cash & Deposits, ...).
      Source: WTO; The Boston Consulting Group analysis

          B) Secondary segmentation

       The objective of secondary segmentation, focused on segments of the short-medium
haul (European and Russian in particular) is that of analysing products and specific cross
primary segments. The basic idea is that the majority of travelers in the medium and long-haul
purchase substantially the "Italy product" (in some cases the "Europe product"), while the
short-haul travelers are able to express more differentiated interests and purchase tourism
products in a manner much more selective.

        Alongside the more traditional products of the tourist industry (sea, mountains, lakes
and art cities), in the course of the study some significant demand segments emerged, defined
on the basis of specific interests and needs. Some of these are clearly supported by
international mega-trends, such as "fitness and active sports" (golf, skiing, cycling, etc.),
"well-being", "religious tourism", "gastronomy" and "shopping".

       With regard to the analysis carried out aimed to assess these new segments, by way of
example we report some relative information on: i) fitness and active sports, ii) well-being
and self-care, iii) religious and iv) shopping.

        i) Fitness and active sports. In this tourism segment it is necessary to further
distinguish the different categories, because the diverse categories under sport generate
different markets in which Italy has a heterogeneous position. Hereunder we outline, for
example, golf, skiing and cycling.

          • Golf tourism in Western Europe generates a market share of € 3.6 billion, of which
            Italy shares only 7%. The principle cause for this can be traced back to the inability
            to attract international tourist-golfers, with an average expenditure per traveler in
            line with the European average. It also takes into account, for example, that the cost
            for international tourists-golfers per golf course in Italy is equal to one-eighth as

18
compared to the Portuguese. The reason for this weakness in a sector which is
              certainly interesting in relation to expenditure per capita depends on the small
              number of golf courses compared to its main European competitors, their low
              prevalence in the territory (mainly in the South, where it would a necessity to
              develop products Golf + Ocean) and the lack of cluster of golf courses (it is known
              that golf tourists prefer destinations where there are concentrated numerous golf
              courses that allow a certain degree of selection on the trip).

          • Ski tourism in the Alps creates a market of ~ € 16 billion, of which Italy captures
            only 5% due to an offer which is dated (very few young internationals in Italy) and
            mainly orientated towards national tourism.

          • The market for cycling in central and southern Europe is estimated at around € ~ 2
            billion, of which 20% in Italy, so this is an area of strength that would necessitate
            specific investments in order to consolidate a position of leadership.

        ii) Well-being and self-care. In Western Europe and in the Mediterranean wellness
centres (SPA) registered revenues of about € 4 billion from international tourism, 6%. This
low market share is due to an average expenditure per international traveler much lower than
the European average (~ 120 € vs ~ 270 € per traveler) and depends on an offer certainly not
at the level of the leading countries of the segment (eg Austria). Even the spas which in Italy
could attract a significant share of this segment of tourism often are not equipped to realize
their potential.

       iii) Religious tourism. A first assessment of the religious tourism market in Western
Europe is estimated at € 7.5 billion. Italy attracts 30% of this segment, but it is second behind
France. These findings are surprising considering the number of major destinations for
pilgrims and religious tourists present in Italy.

       iv) Shopping for many tourists originating from medium-long haul destinations,
shopping has an extremely significantly higher rating than that of European tourists, for
example, according to the survey "Chinese consumer travel survey" by The Boston
Consulting Group, Chinese tourists allocate 40% of their travel spend in this activity2. Italy,
representing excellence in fashion and style, must fully exploit this opportunity.

3.4       The structure and positioning of the Italian offer

3.4.1     The general framework

       The tourism market in Italy generates 375 million overnight stays. Of these,
approximately 55% is generated by coastal areas and art cities and about 44% (165 million
overnight stays) is produced by international tourists (Figure 11).

2   Excluding travel costs. Source: BCG Chinese Consumer Travel Survey, July 2010.
19
Figure 11 – Domestic and international nights in Italian accommodation
      establishments

                                      ~55%
                                                                                                         Region of
        overall                                                                                                         Total
          %
                          116                       94               49       27 14 13      63            origin
                         (31%)                    (25%)            (13%)     (7%)(4%)(4%) (17%)
         100                5                                         1        1    1 1          4       Non – Eur. 35
                                                    22                                                                          165 M
                           34                                        18                          14      Eur.                   ~44%
                                                                                        4                               130
                                                                                    7
                                                    34                        19
          50

                           78                                                                    44
                                                                     30                 8
                                                                                                         Italians       210
                                                    38                              6
                                                                               6                                        375
           0                                                                                                          millions,
                        Sea side                 Art cities       Mountain Lake Hill        Others1                  year 2010
                                                                                   Termal bath

        1. Includes cities not otherwise classified, and minor towns.
        Note: Europeans include West Europe, East Europe and Mediterranean area; Extra-Eu. includes North America (USA and Canada),
        Japan, Russia and BIC, GCC (EAU, Saudi Arabia and Kuwait) and other minor European or non European countries (RoW).
        Source: Istat, The Boston Consulting Group analysis

       As already pointed out, during the last decade nights purchased by foreigners
increased most significantly compared to those purchased by Italians. Specifically, from 2000
to 2010, overnight stays by foreign tourists increased at a rate nearly three times more than
those of Italians, rising from 140 million to 165 million overnight stays, with a growth rate of
1,6% compared to 0.6 % of those of Italians (table 2). It is a further confirmation of the fact
that the strategic choices of the tourism sector must on the one hand aim to strengthen
domestic demand, but on the other hand must point towards growth in international demand.

Table 2. Nights spent by tourist in Italian accommodation establishments
                                  Absolute value (millions)                                                         Percentage
                         2000             2010        Cagr ‘00 – ‘10                                        2000                 2010
Italian tourists          198              210              0,6%                                             59%                  56%
Foreign tourists          140              165              1,6%                                             41%                  44%
Total tourists            339              376              1,0%                                            100%                 100%

       As shown in Figure 9, the most attractive tourism product for foreign travellers is art
cities, a true global magnet of the Italian tourist offer. In this category, the U.S. is the first
customer with 8.1 million overnight stays, followed by Germany (7.6) and France (4.3).

    With regard to other classic components of the Italian offer (sea, lakes and mountains),
the Germans are always the first customers (Figure 12).

20
Figure 12 - Top-10 visitor countries by nights in Italian accommodation
     establishments (2010)

              Art cities                       Sea side                         Lakes                    Mountain

         Country           Nights        Country            Nights      Country         Nights      Country     Nights
                            (Mln)                            (Mln)                      (Mln.)                      (Mln)
      USA                    8.1      Germany                11.7    Germany             9.1     Germany            9.7
      Germany                7.6      Austria                4.0     Netherland          3.7     Poland             1.2
      France                 4.3      Swiss                  2.8     UK                  1.6     UK                 0.9
      UK                     4.2      France                 2.5     Austria             1.0     Czech Rep.         0.9
      Spain                  3.6      Netherland             2.3     Swiss               0.8     Netherland         0.8
      Japan                  2.0      UK                     1.9     Denmark             0.7     Belgium            0.7
      Netherland             2.0      Russia                 1.6     Belgium             0.6     Swiss              0.7
      Swiss                  1.5      Czech Rep.             1.5     France              0.5     Austria            0.6
      Russia                 1.5      USA                    1.1     USA                 0.3     France             0.5
      Austria                1.3      Poland                 1.0     Ireland             0.2     Russia             0.3

      Subtotal              36.0      Subtotal               30.2    Subtotal            18.5    Subtotal           16.3
      Others                19.8      Others                 8.4     Others              1.8     Others             2.5

      Total                 55.8      Total                  38.7    Total               20.4    Total              18.8

      Source: ISTAT, The Boston Consulting Group analysis

   Tourism offer analysis cannot be disregarded by the characterization of regional type. This
provides a very important perspective, because it allows the observance of how five regions
(Veneto, Trentino Alto Adige, Tuscany, Lazio and Lombardy) develop independently ~ 70%
of overnight stays by of the foreigners. This is because these regions offer three of the
strongest products of our country: the "Four Top Cities" (Rome, Venice, Florence and Milan),
Lake Garda and the Dolomites.

    Aggregating the regional data it is also possible to achieve an analysis which synthesizes
the structure of the Italian offer, considering three different supra-regional groups:
• the top five regions (Veneto, Trentino Alto Adige, Tuscany, Lazio, Lombardy)
• the five major Regions of the South (Campania, Puglia, Calabria, Sicily and Sardinia),
• the other ten Regions.

    Figure 13 shows this aggregation highlighting two useful informative categories to help
comprehend the strong asymmetry that characterizes the tourism sector in the country:
• the first five regions have generated 91% of the growth in the period 2000 to 2010,
• the Southern regions, while possessing invaluable historical assets - cultural or scenic, weigh
only 12% of the total and in the decade and captured only 5% of the total Italian growth.

21
Figure 13 – International nights1 in Italy

             Millions
             of nights1                  CAGR2 '00-'10
                                            +1.6%                                                                   Weight
             200
                                               25                  165
                                                1(4%)
             150           140           23 (91%)                   27        Other Regions                          16%
                            26                  1
                                              (5%)
             100
                                                                   118        Top 5 Regions                          75%
                            95
              50

                            19                                      20        5 big Southern Regions                 12%
                0
                          2000             2000-2010              2010
                                            growth

       1. In accommodation establishments. 2. Compound Annual Growth Rate.
       Note: accomodation establishments include hotels, complimentary (camping, rent house, resorts, agricultural acocmodation, youth
       hostels, holiday homes, alpine hut, other accomodation establishments) and Bed & breakfast.
       Source: ISTAT, The Boston Consulting Group analysis

       In addition, in a decade of strong growth in the European market, ten Italian regions
have declined or grew less than 1%. To this is then added an important data of general
characterization: in the last ten years the number of nights of international tourists in Italy
grew by only ~ 1.6% per year, while in the market referred to the annual growth rate was
7.8% (loss of market share in Italy reflects the combined effect of these two elements).

3.4.2 The sea

        The Italian “sea” product is in deep crisis due to the lack of attraction it nurtures
towards international tourism. The main reason is the presence of an alternative offer which
is extremely aggressive, more modern and less expensive in different areas of the
Mediterranean Basin (Spain and then, but with growing trends, other countries such as Turkey
and Croatia). Figure 14 clearly shows that in the period 2000-2010 the number of travelers in
the countries of the Mediterranean Basin is growing at a very strong rate (8.2%), while in
Italy the sea product has even registered a slight decline.

22
Figure 14 – International inbound travellers dynamic towards
          Mediterranean countries

                         Country                          2000                    2010     ∆ '10 vs '00       CAGR
                                                           (M)                     (M)           (M)            (%)
                      Turkey                               7.8                    26.8          19.0           13.2
                      Egypt                                5.3                    13.8          8.5            10.1
                      Tunisia                              5.0                     6.8          1.8             3.1
                      Morocco                              2.3                     4.9          2.6             7.8
                      Cyprus                               2.6                     2.2         (0.5)           (1.9)

                      Croatia                              5.8                    9.0           3.2             4.5

               Mediterranean Area1                        28.8                    63.5          34.7           8.2 %
                                                                    +120%
               Notti in Italia
                                                          39.2                    38.7          (0.6)         (0.1)%
               Prodotto Mare
                                                                      ~0%

               1. Includes Croatia, usually considered within West Europe
               Source: World Tourism Organization, The Boston Consulting Group analysis

        Another aspect deserving of attention is the average size of Italian hotels, which are
much reduced, especially considering that the hotel industry is undergoing a global trend that
sees the development of large-scale structures, mostly concentrated in large hotel chains.

       The phenomenon is very clear observing how, against almost 34,000 Italian hotels,
Spain and France (our direct competitors) we have respectively 15,000 and 17,000. In
addition, focusing on the aspect of dimensions, the average capacity of an Italian hotel is 66
beds, compared with 94 for a Spanish one and 71 for a French one.

        But the most significant comparison is perhaps that which concerns the average
number nights per bed, an index of “productivity” per bed. Italy has an average number of
nights per bed equal to 109 compared to France 190.

        Table 3 focuses on the analysis of marine structures, highlighting the lack of capacity
of the structures in Southern Italy, when compared with, for example, those in Spain.

            Table 3. Comparison between average capacity of sea hotels (year 2010)
                                    Italy                                 Spain
Top-3 regions product Campania                 68         Andalucia                                                     102
sea3                   Calabria                75         Canaries                                                      417
                       Sardinia               116         Baleari                                                       259
Average per country                  66                                    94

    3
       In terms of nights of Italians and foreigners in accommodation establishments. For the Italian Regions, Campania 6.5M nights,
Calabria with 4.8M Sardinia with 4.8M (followed by Sicily with 4.4M and an average capacity of 95 beds per exercise. Abruzzo with 4.3M
and an average capacity of 48 beds, Puglia with 3.5M nights and an average capacity of 91 beds). For Spain, the Comunidades autónomas.

23
Finally, always with respect to accommodation, the development of the market for a
second home is already mature: the total number of nights in the second home (about 670
million) is about twice that in hospitality establishments.

3.4.3 Italy’s position

         Considering the size of international demand, Italy's position still remains very strong.
This finding is confirmed by a study of Isnart (2011) which showed that in general terms Italy
is still the most popular destination by far, followed by France and Spain. With regard to
"BRIC", Italy is the country most in demand in Russia, India and China, while it is in second
place for Brazilians, preceded only slightly by France.

       A detailed analysis of the reasons for this success is provided by the study "Buy Italy",
University of Bologna, carried out on ~ 350 international buyers. The study reveals how Italy
has in the relationship between quality-price (value for money) in infrastructure and
hospitality, major weaknesses with respect to global competitors (Figure 15).

       Figure 15 – Comparison between Italy, Spain and France1 on relevant
       features for tourists (according to a worldwide survey)

                                                             Nature
                                                             5
                                                           4,5
                           Quality/Price                                                 Art & Culture
                                                             4
                                                           3,5
                                                             3
                                                           2,5

                    Infrastructure
                  Infrastrutture e                                                            Food&Wine
                      Ricettivo

                                                                                                                          Italia
                                                                                Shopping                                  Francia
                                        Hospitality                                                                       Spagna
                                                                               opportunities

       1. Worldwide survey: Europe represents 61% of the sample, North America 20%, Asia 12%, South America 3% and Oceania 3% (~ 350
       buyer)
       Source: "Acquistare Italia", Paper by Department of business of the University of Bologna, in collaboration with the Department for
       development and competitiveness of Tourism

        However, it is worth considering that Italy is well positioned with regard to art,
history, gastronomy, natural attractions and shopping. This very strong positioning in the
mind of the international tourist is all the more true for tourists from BRIC. It is evident,
therefore, that Italy needs to exploit its strong brand and its perceived value and enhance it to
the fullest.

3.4.4. Districts and priority tourist destinations

24
In Italy there are about 150 districts or tourist destinations, of these, about 40 appear to
have a significant growth potential and attraction, especially in terms of the ability to attract
international tourists.

       In order to make a scale of first priorities it is necessary to evaluate individual districts
along two axes: the first is the total number of nights, the second is their potential. In doing
so, they emerge as important and to be “cultivated” the so-called Global Magnets (Rome,
Venice, Milan, Florence), the “Best Sellers” (Lake Garda and Alto Adige), the major sea
products in difficulty and about thirty districts of medium-small with high potential (Figure
16).

       This is clearly a first prioritization exercise of the districts, the most important from
the point of view of methodology, and not of actual choices; in this regard it is necessary to
deepen the analysis in order to be able to launch pilot projects for the development of these
destinations

       Figure 16 – Italian tourist districts by dimension and development potential

                                 Potential for international
                                 tourism
      1° prioritization          MAX
       E.g.:                                                                                   Global                      1° prioritization
                                             Medium-little
       • Costiera Amalfitana
                                           districts with high                                "Magnet"                     •   Rome         Average
       • Naples+Pompei+Gulf                                                Best Sellers                                    •   Venice
       • Smeralda Coast                         potential                                                                                 expenditure
                                                                                                                           •   Milan
       • Cortina, Cinque Terre
                                                                                                                           •   Florence
                                                                                                                                           increase
       • Pisa, Siena, Chianti
                                             Medium-little                                                                     4    ~60     ~45
                                 MED
                                             districts with
        30 ~110        ~40                     average                      Big seaside
                                                                                                                           • Alto Adige
                                             development                    products to                                    • Garda lake
                                               potential                    defend and
                                                                              revamp                                           2    ~50     ~30
        30 ~70         ~20                  Little districts1
                                                with low
                                            developmetn                                                                    • Romagna seaside
                                                potential                                                                  • North-East seaside
        70 ~30          ~5       MIN                                                                       Nights              2    ~50     ~20
                                       0      5       10         15   20     25     30          60      65
                                                                                                           (Mln 2010)

                                                                                                     xx # Districts Nights (Mln)    Inbound nights (Mln)

       1. Includes almost every district hosting less than 0.3Mln international tourists in 2010
       Note: Potential is defined through a quali-quantitative analysis, according to district dimension, foreign/ Italian tourists ratio,
       international tourists growth and qualitative elements (e.g.: uniqueness, natural or artistic assets, growth enablers presence, ...)
       Source: ISTAT, Working Group of the Ministry

        Clearly, the analysis of the products with the greatest potential is not sufficient to be
able to develop new districts of attraction internationally in a competitive and crowded
market. In order to be able to move from analysis to projects, it is necessary to firstly
prioritize the destinations or districts on which to focus their efforts, and secondly to place the
identified products accurately, in terms of responding to the needs of the segments of demand
most interesting for Italy (affluent Europeans and travelers from BRIC). The development of
these products will depend then on the effectiveness of the system of offer in terms of promo-
marketing, also through digital channels. It is quite evident that this approach opens up the
issue of coordination between the subjects, in particularly among policy makers and the need

25
to find a new way of defining and managing development policies that involve the central
State and the Regions (which will in turn find new ways of integrating the offer).

26
4. CRITICAL ELEMENTS FOR TOURISM POLITICS IN ITALY
        Based on the analysis, research, interviews and consultation of all the available
documentation, some critical issues have been identified for the definition of a policy for the
development of tourism in Italy. These challenges relate to the assets of the country from the
point of view of tourism, distinguished between "permanent assets" and "temporary assets",
whereby "permanent" means the Italian areas with recognized prestige and notoriety
(religious, naturalistic, gastronomic and artistic-cultural assets) and where "temporary" means
the current positioning of the country (for example, lifestyle and fashion), the socio-political
context and the large events or exhibitions that take place there (Figure 17).

            Figure 17 – Italian context: strong assets, but critical elements on
            intervention levers

                                                                                                                           Areas of
                                                                                                          Lifestyle,       strength
                             Gastronomic                                                                   fashion,
                                                                  Sales channels
                               assets                                                                    shopping, ...

           "Religious"                          Communication
             Asset                                                                     Products
                                                and promotion

                            "Permanent"                            Governance                           "Temporary"
                               assets                              of Tourism                              assets
           Areas of                                                                                                       Socio-political
                                                    Regulatory                                                               context
           strength                                                                 Accomodation
                                                    framework                                                               (stability,
                                                                                                           Worldwide        safety ...)
                            artistic-cultural                                                                events
                                                                     Training
                             and historical                                                             (Olimpic games,
                                                                    and skills
                                 assets                                                                   exhibitions,
                                                                                                            Expo, ...)      Areas of
                                                    Investments
                                                                                    Transportation                        improvement
                                                                                   and infrastracture

           Critical elements
           on all intervention
                  levers

            Source: Working Group of the Ministry

        The following is a breakdown of the level of criticality that emerged, grouped by
single intervention lever.

       a) Governance of Tourism
          • This is the most critical principle appraisal that all the operators of the sector
            report. In terms of a lack of a strong central governance, necessary to make
            things happen in a cross-sector.

          • Marginality in the tourism sector in the development policy of the country and
            fragmentation of the decision-making between Government and
            regional/provincial/municipal authorities
          • Minister without portfolio, with few levers and economic resources necessary to
            guide in an effective manner the development of tourism.
          • Lack of capability to affect the local offer within global competitiveness.

27
• Lack of a reliable database and efficiently updated and the difficulty
         in reading tourism data.
       • Lack of structured mechanisms of co-ordination between Government, Regions
         and Associations oriented to “make things happen”.
       • Difficulty in monitoring ongoing actions (or launch), of investments and
         expenditure linked to the development of tourism.

     b) Communication and promotion

       • Role of the Agenzia Nazionale del Turismo (ENIT) insufficient.
       • Lack of coordinated promotion at the level of “Sistema Italia”.
       • Lack of digital strategy of the country in terms of tourism.
       • Absence of a “Sales Management Italy” to take care of setting priorities and
         develop key products (support to the Regions in product development, including
         interregional, and in the definition of economic targets that must be met.
       • Insufficient use of international cinema to promote tourism in Italy in countries
         that are less familiar with the Italian culture.
       • Low sensitivity towards the consequences of misconduct and opportunistic for
         the tourism sector (e.g. fraud).
       • Passivity in communication and Public Relations (e.g. during crisis
         management).

     c) Sales channels

       • Insufficient use of digital sales channels.
       • Lack of structured accord at a national level with tour operators outbound
         international.
       • Discrepancies between the rating systems of hotels (e.g. the “stars” system”).
       • Strong fragmentation of the product offer and services for incoming.

     d) Products
        • Lack of central co-ordination with Regions on what products to develop and
          promote on the segments of priority of demand.
        • Absence of a plan or central thrust in terms of the structuring and promotion of a
          calendar of events in support of tourism.
        • No “APP” service for smartphone/tablet aimed at foreign tourists..
        • Lack of priority and focus on products/tourist districts to be developed and offer
          not aligned to the needs of the target segments.
        • Lack of focus on key target segments in terms of size and expense (affluent
          Europeans, BRIC e Gulf).
        • Cultural heritage undervalued both in terms of tourism (number of visitors) and
          economically (revenue per tourist) with respect to all international benchmarks.
        • Lack of innovation in tourism products.
        • Accommodation and infrastructure scarcely adequate to accommodate
          international conferences.
.
     e) Accommodation
        • High proportion of outdated and obsolete structures.
        • Low average size of hotels (especially in the segment family/sea product) the
          result of investments developed in the fifties and sixties.
        • Quality and standards vary widely and low reliability of classification systems.

28
f) Transport and infrastructure
        • Weakness in the infrastructure necessary to accommodate and host the
          increasing flow of tourists arriving in the next ten years in the “4 Top Cities”
          (Rome, Venice, Milan, Florence).
        • Connections “last mile” between the airport and final destination (e.g. Quality
          Fiumicino train, slow train Malpensa, absence of metro at Linate, etc.)
          inadequate for standard set for international tourists, in particular for medium-
          high level.
        • Amount of direct flights with countries with strong growth inferior with respect
          to competitor countries (Germany, France, Spain, UK etc.), with regard to
          national airline companies and foreign companies.
        • Number of low-cost flights to Europe less than with respect to competitors.
        • Valorisation incomplete with regard to destinations with potential for low-cost
          carriers.
        • Quality rail infrastructure focused only on the axis TO-SA.
        • No segmentation and taxi service standard.

     g) Training and skills
        • General problem of image and low attraction for the tourism profession for the
          young.
        • Lack of professional schools at the level of Directorship and tourism
          management (e.g. École Hôtelière de Lausanne).
        • Level of professional institutes for Tourism not in line with the needs of the
          sector.
        • Combined effect: professionalism in decline, with negative impact on
          international travellers.

     h) Investments
        • Lack of key requirements to attract foreign investment. International investors
           ask for three main things: fiscal stability, low risk country and structured
           approach in order to define a “reason why” to invest.
        • Low confidence of investors in relation to “partner Italia”.
        • Fiscal pressure and difficult access to credit determine a potential hold on the
           development of investment in the sector by existing companies.
        • Absence of a structured approach and co-ordination in order to attract tourism
           investment, both Italian and foreign.

     Regulatory framework
       • Timing and process for issuing visas is problematical in the face of the number
          of requests in arrival from strong growth countries.
       • Failure to exploit asset and public location destined for tourism investment..
       • Bureaucracy perceived as an obstacle to the development of new tourism
          districts.
       • High bureaucracy in the operational management of tourism enterprises.
       • Margins of the actual tax refund mechanism not addressed to the specialized
          operators of the tourism industry sector.
       • Weight of taxation is not consistent with a view to tourism development (e.g.
          penalty coming from VAT rate not in line with competitors).
       • Absence of efficient mechanisms to encourage the creation of enterprise
          networks even in the presence of the phenomena of spontaneous aggregations.

29
These nine areas represent critical scenarios on which it is necessary to dedicate the
highest attention in order to establish a coordinated set of actions to requalify the Italian
tourist offer as a whole.

30
PART TWO

     ACTIONS FOR THE DEVELOPMENT OF TOURISM

31
5. OVERVIEW OF STRATEGIC ACTIONS

5.1    Holistic approach in defining actions

         Any action implemented to effectively impact development needs to take into account
that tourism and its products are the result of working on all nine levers of intervention
illustrated in the previous Chapter, bar none, which is to say: Governance, Communications
and promotion, Sales channels, Product range, Hospitality, Transportation and infrastructure,
Training and skills, Investments, Regulatory framework.
         Italy’s assets certainly represent a competitive advantage because they exert a strong
attraction for national and international tourists, but the success of tourism products
increasingly relies on the ability to act simultaneously on all the levers. For example, there are
recent cases of major tourism investment in Southern Italy (for instance some hotels in
Sicily), which did not reach its desired goals because of the weakness of some of the
identified targets and, conversely, there are positive examples such as Salento (The heel of
Italy), where effective efforts were made on all important levers.
         Furthermore, it is crucial to think of the tourist’s experience as an end-to-end process,
i.e. from the moment the potential tourist develops a desire to depart until when, upon
returning home, the memory of the trip feeds the desire to revisit the place. This way of
thinking about a touristic experience is important particularly for Europeans week-enders,
who often go back to favorite destinations that bring to mind important memories.

       In analytical terms, it is possible to divide the experience of a hypothetical tourist in
five main steps:
       i) The desire to leave based on preferences and needs (individual, socially defined or
           constraints based on external stimuli);
       ii) The gathering of information needed to make a decision (taking into consideration
           that different people use different channels and are sensitive in different measure to
           the several elements of the tourist offer, such as hotel, transportation, etc.);
       iii) The decision of how to purchase and the trend to forgo intermediaries thanks to the
           popularity of search engines and specific digital applications;
       iv) The experience in its many facets, which is not solely based on the product but all
           the components of the offer: product, total travel time, quality of transportation,
           quality and services of accommodation, hospitality, etc. (for example, the quality of
           the relationship with the first cab driver that drives the tourist to the hotel to the
           farewell of the flight attendant of the airline that flies the tourist back home);
       v) The memory and the desire to leave again for a trip, which implies the need to keep
           alive all positive aspects of the experience, while trying to communicate with the
           tourists and to provide to them new reasons to return.

        This set of steps offers a comprehensive approach to the tourist experience. The
guidelines of the Strategic Plan, which are explained in the section below, were identified on
the basis of these steps.

5.2    Guidelines and potential impact of the Strategic Plan

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