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2126 Words
Introduction - Experience Economy, Tourism, Entrepreneurship & Innovation
The experience economy is generally stated as the economy where the products or services of a particular industry are sold on the basis of the impact the particular product has on people’s lives. The study generally aims to describe the disruption in the experience economy from the perspective of the tourism industry. The study describes a huge significance in the tourism industry as the issues in the economic industry can affect the innovation in the industry and entrepreneurship factors of the industry. The study is going to analyze the theories of entrepreneurship and innovation and their relation with the experience economy, the range of entrepreneurship and innovation in the tourism industry and the commercial and economic data for the tourism industry in the experience economy.
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Critical illustration of theories of entrepreneurship and innovation and their relation with the experience economy
The experience economy of different industries is highly effective for innovation and entrepreneurship in the industry. In this study context, the tourism industry is the proper factor that can be highly effective for the discussion of innovative and entrepreneurship factors. In the tourism industry, the economic theory of entrepreneurship is the most important factor for developing the industry through different stages. As stated in the economic theory of entrepreneurship, the most relative factors with the entrepreneurship factors are the old, natural resources, labour and capital for the business. In context with the tourism industry, these are very effective factors as the company needs to develop these aspects on the basis of the ability of risk-taking and critical thinking processes. In the opinion of Parker, (2018), the incentives or constraints can develop a high involvement of innovation in organizational structure or strategies. The economic theory of entrepreneurship is highly related to the experience economy through its impact on the initial stages of the businesses. The customer staff action approaches and the attracting new customers factors are the cases that can be equal for the involvement of the innovative approaches for the organizations.
Innovative approaches are also a huge factor in the evaluation of the practices in the different newly started businesses. In the tourism industry, there is a lot of scope for innovation as the entrepreneurship factors in this industry are also very effective. But the theory that is the proper match in the concept of the tourism industry for innovation is the “Innovation Diffusion Theory”. As per the Innovation Diffusion Theory, the implementation of the pattern and speed for spreading the services or the products of a business needed to be perfect (Yuen et al., 2021). Moreover, the theory also provides strategies and techniques for improving innovative approaches. There is a huge relationship between the theory and the experience economy. As per the view of Chang, (2018), the experience economy mainly focuses on how new customers in the businesses can be attracted and the old customers can be retained. The theory describes the processes or the patterns for spreading the services of the industry. These two factors are interconnected with each other that describe the proper innovative approach for the development of the industry. The interconnection of the theory and the experience economy helps in increasing the number of “innovators, early adopters and laggards” in the business.
Critical Discussion of entrepreneurship and innovation across a range of economic and business contexts in tourism
In context with the innovation in the tourism industry, there are a lot of special features that are being developed in the industry for growth of the industry. The pandemic has impacted the industry in a surprisingly negative way. There are different approaches that the industry has taken for the improvement of the market in the industry. In the opinion of Pantano and Stylidis, (2021), “sustaining employment and bringing in foreign currency” is the initial and proper innovative approach that the industry introduces. These factors have developed a huge impact on the experience economy of the tourism industry as the customer retention rate increases and customers are attracted towards the industry on a large scale. Besides, the development of the AI system in the industry and the use of AI robots in the industry are very appropriate factors, especially after the pandemic. The less use of the human resource decreases the factor if affected by the virus. The factor also introduced the touchless factor which is the most attractive feature in the post-pandemic period. Innovation in the industry helps in gaining back the reputation of the industry in many countries.
Entrepreneurship can be considered a key factor that can lead to more growth and development in the tourism industry by developing new services or products. According to Serafimova and Petrevska, 2018), entrepreneurs are important for the tourism industry as they can enhance the economic growth and development of countries. For instance, the tour and travel industry contributed 5.81 trillion US Dollars in 2021 to global GDP (Statista, 2022). Gürlek (2022) states that the development of new services or products helps in producing more employment opportunities for people, which further contributes to economic development. Thus, public policies play a crucial role in encouraging and supporting entrepreneurship. For instance, the USA is conceded as the most entrepreneur-friendly country due to its favourable governmental policies and encouraging the culture of entrepreneurs.
Following this, entrepreneurship also plays an important role in initiating innovations in the tourism industry. Ratten et al. (2019) tourism companies are bringing on innovations such as offering virtual tours and incorporating AI-powered robots to enhance customer services. In addition, it is also helping in preserving the natural environment by developing new conservation policies. Most importantly, entrepreneurship in the tourism industry is also helping in promoting social changes and reducing cultural barriers. As per the viewpoints of Ndou et al. (2019) entteprenusare are offering tour services to remote areas across the world which helps in bringing together people from different cultures and backgrounds. Therefore, it indicates that entrepreneurship is a key factor for initiating new development in the tourism industry.
Analysis of the commercial and economic data in the evaluation of ideas for entrepreneurship and innovation in tourism
Entrepreneurship and innovations are leading to the development of new services or products in the tourism industry that works to improve customer service and economic development. The tourism industry across the world witnessed a growth rate of nearly 20% during the 2020-21 period (Statista, 2022). It signifies that the tourism industry worldwide is witnessing a surge in tourism activities and the commencement of new business ideas. According to Fu et al. (2019) several new tourism companies are being formed to offer persoanlised customer services. For instance, Arrive Outdoors is among the ten most innovative travel companies as of 2021. The three-year-old company has witnessed a growth of 439% in revenue and 488% in orders between 2020-21 (Fastcompany, 2021). The organisation is focused on offering sustainable and affordable outdoor experiences to people. In addition, the firm possesses a CSAT score of 99% due to superior customer service. It signifies that entrepreneurship is working to improve customer services in the tourism industry.
Most importantly, entrepreneurs are also leading to the development of the metaverse segment in the tourism industry. In addition, the metaverse travel segment is forecasted to reach 188.24 billion US Dollars by 2026 along with a growth rate of 26.01% CAGR (Technavio, 2022). Innovation is a key requirement for the experience economy, particularly the tourism industry. It is also considered an innovative industry due to the association of entrepreneurs with sociability. Nowadays, most tourism companies offer their services through mobile-based applications. Aquino (2022) states that it helps customers share their tourism experiences with others, which directly persuades businesses to make changes in services or products. Tourism witnessed rapid digitalisation due to the Covid pandemic. Travel-based mobile applications reported a growth of 38% in revenue in 2021 (Statista, 2022). The worldwide travel technologies segment is forecasted to be valued at 12.5 billion US Dollars by 2026 (Prnewswire, 2021). In addition, the travel technologies segment of China is forecasted to reach 1.9 billion US Dollars by 2026. Thus, it signifies that the development of new technologies is transforming the tourism industry.
Following this, virtual tours are also acquiring significant popularity worldwide due to their ability to offer travel experiences to people without mobility implications. The worldwide virtual tourism industry is valued at 5 billion US Dollars in 2021 (Statista, 2022). North America is regarded as a global leader in the VR and AR-related tourism industry. USA and Canada account for more than 57% of VR and AR-related jobs in the tourism industry (Marketdataforecast, 2022). The major market for virtual tourism is in Europe, North America and Asia Pacific. Therefore, it can be stated that the tourism industry is experiencing a transition period due to the development of the virtual reality segment.
Conclusion
Based on the above analysis, it can be concluded that the global tourism industry is witnessing significant changes due to new technologies, particularly VR and the metaverse. The key requirements for entrepreneurship are labour, capital and natural resources. The tourism industry is witnessing several innovations such as AI-powered robots. In addition, the tourism industry reported a nearly 20% growth in 2020-21. Most importantly, the virtual tourism segment reached 5 billion US Dollars in 2021.
References
Journals
Aquino, R.S., 2022. Community change through tourism social entrepreneurship. Annals of Tourism Research, 95, p.103442.
Chang, S., 2018. Experience economy in the hospitality and tourism context. Tourism management perspectives, 27, pp.83-90.
Fu, H., Okumus, F., Wu, K. and Köseoglu, M.A., 2019. The entrepreneurship research in hospitality and tourism. International Journal of Hospitality Management, 78, pp.1-12.
Gürlek, M., 2022. Social Entrepreneurship in Tourism, Hospitality and Events: A State of the Art. Planning and Managing Sustainability in Tourism, pp.59-78.
Ndou, V., Mele, G. and Del Vecchio, P., 2019. Entrepreneurship education in tourism: An investigation among European Universities. Journal of Hospitality, Leisure, Sport & Tourism Education, 25, p.100175.
Pantano, E. and Stylidis, D., 2021. New technology and tourism industry innovation: evidence from audio-visual patented technologies. Journal of Hospitality and Tourism Technology.
Parker, S.C., 2018. Entrepreneurship and economic theory. Oxford Review of Economic Policy, 34(4), pp.540-564.
Ratten, V., Costa, C. and Bogers, M., 2019. Artisan, cultural and tourism entrepreneurship. International Journal of Entrepreneurial Behavior & Research.
Serafimova, M. and Petrevska, B., 2018. Female entrepreneurship in tourism: A strategic management perspective in Macedonia. Journal of Applied Economics and Business, 6(1), pp.21-32.
Yuen, K.F., Cai, L., Qi, G. and Wang, X., 2021. Factors influencing autonomous vehicle adoption: An application of the technology acceptance model and innovation diffusion theory. Technology Analysis & Strategic Management, 33(5), pp.505-519.
Websites
Fastcompany, 2021. Top 10 most innovative travel companies of 2021. [Online] Available at: https://www.fastcompany.com/90600337/travel-most-innovative-companies-2021 [Accessed 12 November 2022]
Marketdataforecast, 2022. Virtual Tourism Market. [Online] Available at: https://www.marketdataforecast.com/market-reports/virtual-tourism-market [Accessed 12 November 2022]
Prnewswire, 2021. Global Travel Technologies Market to Reach $12.5 Billion by 2026. [Online] Available at: https://www.prnewswire.com/news-releases/global-travel-technologies-market-to-reach-12-5-billion-by-2026--301346753.html [Accessed 12 November 2022]
Statista, 2022. Digitalization of the travel industry - statistics & facts. [Online] Available at: https://www.statista.com/topics/7589/digitalization-of-the-travel industry/#dossierKeyfigures [Accessed 12 November 2022]
Statista, 2022. Market size of the tourism sector worldwide from 2011 to 2021, with a forecast for 2022. [Online] Available at: https://www.statista.com/statistics/1220218/tourism-industry-market-size-global/ [Accessed 12 November 2022]
Statista, 2022. Market size of the virtual tourism industry worldwide in 2021, with a forecast for 2027. [Online] Available at: https://www.statista.com/statistics/1312254/virtual-tourism-market-size-worldwide/ [Accessed 12 November 2022]
Statista, 2022. Total contribution of travel and tourism to gross domestic product (GDP) worldwide from 2019 to 2021. [Online] Available at: https://www.statista.com/statistics/233223/travel-and-tourism--total-economic-contribution-worldwide/ [Accessed 12 November 2022]
Technavio, 2022. Metaverse Market in Travel and Tourism Industry by Application and Geography - Forecast and Analysis 2022-2026. [Online] Available at: https://www.technavio.com/report/metaverse-market-in-travel-and-tourism-industry-market-industry-analysis [Accessed 12 November 2022]
Walia, A. (2022) The Economic Theories of Entrepreneurship, Knowledge Tank. Available at: https://www.projectguru.in/the-economic-theories-of-entrepreneurship/ (Accessed: November 12, 2022).
