1 Introduction and summary
Tourism is one of the world’s fastest-growing industries. Increased globalisation provides new opportunities for expansion in the Norwegian tourism and hospitality industry. This leads to more jobs and local development, not least in municipalities in the outlying districts. Norway features spectacular natural surroundings, a wide array of cultural monuments and a cultural life that is attracting international attention in a growing number of areas.
Source The Government’s Sundvolden Declaration, 2013
The Norwegian tourism industry had another record year in 2016, following strong growth in the number of visitors in 2015. Figures compiled by Statistics Norway show a clear increase in the number of overnight stays in both the winter and summer seasons. While it remains the case that a majority of the travellers are from Norway, the greatest increase is attributable to those from abroad. Average annual growth in the number of foreign visitors to Norway has exceeded the international average since 2010.1 The tourism industry accounted for just over 4 % of value creation and almost 9 % of employment in the Norwegian business community in 2015.2 Nearly 160 000 people work in the tourism industry.
One reason for the positive trend in visitor numbers in recent years is a weaker Norwegian currency, the krone. The exchange rate for the krone has strengthened Norway’s competitiveness on a pure cost basis and has increased the purchasing power of tourists who choose Norway as a destination. The weakening of the krone has also made foreign travel more expensive for Norwegians. The number of overnight hotel stays by foreign visitors rose 22 % from July 2013 to July 2015, a period in which the krone weakened by 17 %.
However, the exchange rate alone does not explain the growth in visitors in recent years. Long-term promotion of Norway as a destination has been another growth factor. In addition, the tourist industry’s determined efforts to spur product development, cooperation and training have helped boost visitor numbers. The tourism industry has taken advantage of the opportunities inherent in digitalisation and enhanced its productivity by such means as streamlining work processes.
Today’s tourism situation in Norway is a good starting point for developing the tourism industry. Projections of strong growth in the number of people travelling internationally suggest that Norway could see a significant rise in the number of foreign visitors in the coming decade. Few other industries, if any, can point to such potential demand growth. The tourism industry could thus become an important force for creating new jobs, including additional year-round jobs. Already, the tourism industry is a major employer of young people and people with immigrant backgrounds.
The tourism industry faces a number of challenges, however. An increased number of travellers puts pressure on the natural environment and may also affect local communities. Additionally, productivity and profitability in the tourism industry may be undermined by inadequate coordination – as when local projects and servic es of collective benefit, of interest to a limited number of actors, are insufficient. Responsibility for addressing such challenges lies primarily with the tourism industry itself. The industry points to a variety of examples that indicate its commitment to providing good solutions. Operators and other industry participants have been creating high-quality, tailor-made and competitively priced products; the industry has also become both more cooperative and productive.
The Government is submitting this white paper on Norway’s tourism industry in order to describe recent developments in tourism and to outline opportunities and challenges faced by the industry. The white paper lays out the Government’s overall policy for the tourism industry, including the ways in which the Government will strengthen the foundation for the industry’s development in the longer term.
1.2 The Government’s policy for the tourism industry
The overarching objective of Norwegian industrial policy is to maximise value creation in the Norwegian economy within a sustainable framework. Increased value creation and profitability are likewise key aims of the Government’s tourism industry policy, and these must be achieved sustainably. To achieve these objectives, the Government will focus its efforts in five areas.
Good general framework conditions
The Government facilitates value creation and profitability in the tourism industry primarily by establishing good framework conditions for business activity in general. To improve Norwegian competitiveness, the Government is prioritising tax and fee relief for Norwegian companies as well as industrial research funding and faster road and rail construction. The Government focuses on simplification and digitalisation, so companies can spend less time on fulfilling their reporting duties and following regulations, and more time creating value and jobs. As the Government amends framework conditions – including the inheritance tax, the wealth tax, the Working Environment Act and tender regulations, all with an eye to strengthening the business community – the tourism industry is one beneficiary. Elimination of the inheritance tax has helped to smooth generational transitions in family-owned businesses, and was an important simplifying measure for many actors in the tourism industry.
The Government will pursue additional measures in areas of special importance to the tourism industry.
In accordance with the Storting’s agreement on a tax reform, the Government will continue its work reducing the wealth tax. The gradual reduction in the wealth tax is helping ease the tax burden on the owners of many Norwegian companies. The Government aims to further increase the valuation discount for shares and working assets. For the central government budget for 2018 the Government intends to propose wealth tax relief for hotels and other accommodation establishments by significantly increasing the valuation discount.
The tourism industry is subject to various kinds of supervision whose overall effect can be improved through better planning, risk assessment and implementation. The Government insists that the purpose of supervisory practices be easy to communicate to the industry, and that implementation be adapted to the industry’s needs. The Government will therefore map supervisory practices involving the tourism industry in order to create a knowledge base encompassing the design, extent and effect of such supervision. The information obtained will provide a basis for considering potential new measures.
In accordance with the white paper Digital Agenda for Norway (Meld. St. 27 (2015–2016), the Government will encourage the business community to exploit opportunities associated with digitalisation. The fact that the public sector communicates with the business community increasingly through digital channels will benefit the tourism industry’s many small actors.
A sustainable tourism industry
Sustainability must be the basis for further development of the tourism industry. The industry must assume a long-term perspective in managing its resources. Doing so will give tourism industry participants a framework for decision-making and setting priorities, whether local, regional or national.
It is in the tourism industry’s interest to be part of developments that promote environmental, social and economic values. Sustainable development can give local communities a stake in the growth of tourism in their area.
In order to achieve national and international environmental goals, the Norwegian tourism industry must base its activities on sustainability and environmental considerations. Companies and destinations that invest in eco-labelling help the environment, but also help ensure their own future. Norway’s international reputation for sustainability and environmental commitment creates certain expectations of Norway as a destination.3 To meet such expectations, the parties involved must contribute to the industry’s development in a sustainable direction.
Nature is a significant aspect of what the Norwegian tourism industry markets. Much of the industry bases its products on the natural environment, and an increasing number of people will experience Norway through activities that take place outdoors. Over time, increased traffic and crowding could exacerbate wear and tear in natural areas, undermining the quality of the tourism product. For visitors, this could diminish the quality of the experience and even affect safety.
The Government will promote management of human traffic in nature by providing information, signage and simple infrastructure. As part of this effort, the Government will market a selection of prepared hiking trails as national hiking trails, on the model of Norway’s National Tourist Routes for roads. The objective is to make the trails sustainable and more accessible, and thus attractive for travel and business activity.
The tourism industry comprises many companies active in different parts of the industry. Operating alone, few of these can provide a comprehensive product to customers; they are dependent on cooperation with others. If comprehensive tourism products are to become more widely available in the market, effective coordination will be needed across sectors and regions within the tourism industry. Cooperation within the industry as well as cooperation with local and regional administrative bodies and with other industries will be needed to further develop Norwegian destinations and tourism products.
The Government has facilitated consolidation of the country’s tourism boards into larger and fewer entities. The tourism industry is now divided into six regional tourism boards. The new tourism industry structure can serve industry participants better and more efficiently than before; it may also contribute to increased profitability.
The successful development of strong destinations depends on effective, purposeful cooperation between the tourism industry and local actors such as municipalities, county authorities and volunteer groups. Resolving many of the tourism industry’s challenges – including the production and funding of specific projects and services of collective benefit – will require cooperation by multiple parties. Such products of collective benefit affect a destination’s competitiveness, and include destination marketing as well as products that benefit visitors at the destination, such as ski trails. Developed, accessible goods and services of collective benefit can make a destination more attractive, resulting in increased revenue and profitability for local businesses. Conversely, a lack of such products can have the effect of weakening local tourism products.
Collaboration has proved crucial in setting up funding mechanisms for projects that promote collective benefits. There is no blueprint for creating collective benefits at a destination. The norm should be that those who profit or have an interest in a particular product or service contribute to it financially. This may apply to companies, municipalities or other local actors.
The new structure for regional tourism boards provides the industry with a sound basis for improved coordination. The regional boards can help local actors resolve challenges related to the funding of collectively beneficial projects and services by discouraging freeloaders and assisting in the distribution of gains arising from cooperation between participants. At an appropriate time, the Government will evaluate the effects of the new structure on addressing these challenges.
In developing good tourism products, it is important to cooperate with other industries. The cultural affairs sector is an important resource for tourism products, in that cultural experiences help increase the value of Norway as a destination, thereby enhancing value creation in the tourism industry. It is important to highlight the added value of increased cooperation between culture and tourism and to encourage knowledge acquisition. The Government will develop a strategy for culture and tourism, with emphasis on cultural tourism. Collaboration between Norway’s cultural and creative industries on the one hand and its tourism industry on the other could increase the public draw of cultural events and the diversity of experiences available to the tourism industry. More cooperation may result in added value for both sides. To facilitate improved cooperation, the Government will establish a cooperation council for culture and tourism modelled on the Industrial Policy Council for the Cultural and Creative Industries. To improve coordination between the different products, the Government will look into the possibility of establishing an online nationwide cultural calendar, possibly to be implemented as part of visitnorway.com’s existing system.
The Government has submitted a separate strategy on rural tourism based on agriculture, often referred to as agritourism. The Government will help to ensure that experiences and activities related to agriculture and reindeer herding contribute to Norway’s development as an attractive destination.
Promoting Norway as a destination
On behalf of the Ministry of Trade, Industry and Fisheries, Innovation Norway is responsible for promoting Norway as a destination. In joint campaigns with the tourism industry, Innovation Norway funds broad promotional marketing (generic marketing) while individual companies pay their own sales-generating parts of the campaigns. Visitnorway.com is Norway’s official tourism portal. The portal presents content that generates consumer interest in experiencing Norway; it is also a response channel for campaigns, directing consumers to websites that highlight specific types of experiences and offers.
Several factors affect interest in Norway as a destination. Innovation Norway’s promotional activities are well documented, but better analysis of their impact is required. The Government will therefore initiate a project to measure the effect of Innovation Norway’s promotional work on value creation in the tourism industry.
The work of promoting Norway as a destination should be organised so as to maximise total value creation. The Government sees no basis for concluding that today’s organisation – with Innovation Norway responsible for promoting Norway – is ineffective. It is the Government’s wish therefore that Innovation Norway retain responsibility for promoting Norway as a destination.
During the next overall evaluation of Innovation Norway, the Government will look at the synergies achieved between Innovation Norway’s promotion of Norway as a destination and the organisation’s other work. This review, in conjunction with stronger analysis of the effects of promoting Norway as a destination, will provide a basis for considering Innovation Norway’s engagement at a later date.
Knowledge and expertise in tourism
Knowledge and expertise in the tourism industry are important for making correct decisions at different levels and for developing innovative and forward-looking tourism products.
There are several ways to make the tourism industry more knowledgeable. Educational programmes and research and development (R&D) are among the most important. Innovation occurs largely on the basis of market impulses, knowledge gained from experience and development projects involving the use of new technology. There is reason to believe that the potential for R&D-based innovation is rising as the industry becomes more knowledge-based and more reliant on digital technology.
The tourism industry, like all other industries, can avail itself of general support programmes tied to research, development and innovation. The Government also favours continued research on tourism in particular, with emphasis on topics defined by the industry itself.
1.3 Input to the white paper
In producing this white paper, the Ministry of Trade, Industry and Fisheries gathered comments, knowledge and information from the industry and other relevant actors. In 2015, the Minister of Trade, Industry and Fisheries held input meetings in Beitostølen, Oslo, Kristiansand, Loen, Bergen and Tromsø. Tourism industry representatives participated in these meetings. A number of actors also submitted written comments on a variety of topics.
Some of the input received by the Ministry of Trade, Industry and Fisheries concerned general framework conditions, such as policy framework stability, increased attention to tourism in transport policy and greater emphasis on the importance of tourism in regional policy.
Many commenters expressed a desire for more focus on, and awareness of, sustainable development of and within the tourism industry.
There were also proposals relating to organisation, including calls for more focus on cluster activity in the tourism industry, proposals for future funding of regional tourism boards and improved interaction between different policy areas. Comments on quality labelling included proposals for a national quality assurance scheme, a national labelling system for adventure tourism companies, a certification system for guides, and a programme to improve safety in connection with nature-based adventures and experiences.
With regard to funding for projects and services of collective benefit, comments were received on either a statutory funding scheme or new attempts at voluntary schemes.
As pertains to marketing, several commenters sought increased public funding and improved involvement by the tourism industry in promotional planning.
Several parties submitted comments relating to knowledge and expertise, including a desire for further development of existing educational programmes, more funds earmarked for tourism research and adaptation of existing policy instruments to benefit service industries. A need for better tourism-related statistics related was also noted.
1.4 Content of the white paper
Chapter 2 introduces various parties active in Norwegian tourism. The chapter includes a description of tourists within and to Norway, as well as of tourism industry actors and some of the industry’s supporters in the public sector. Chapter 3 elucidates important global trends in tourism. The trends with a major impact on the tourism industry, such as sustainability and the sharing economy, receive extra discussion. The development potential for different segments of the tourism industry is also examined. Chapter 4 provides a broad description of the tourism industry’s resource base by category – city, culture or nature – and of the opportunities and challenges that the tourism industry faces in each category area.
In chapter 5, the Government highlights key issues related to the Norwegian tourism industry. The Government facilitates value creation and profitability in the tourism industry primarily by establishing sound framework conditions for business activity in general. However, the Government is also pursuing measures that target this industry in particular due to the specific challenges it faces. Chapter 5 explains the Government’s policy for the tourism industry and how it can strengthen the industry’s foundation for development in the longer run.
Chapter 6, the concluding chapter, sets out the financial and administrative consequences of the white paper’s content.
In the 2010–2015 period, Norway experienced average growth of 6.6 %, against 4.8 % growth internationally. Figures from Statistics Norway and the World Tourism Organization (UNWTO).
Measured as a percentage of gross mainland production in the private sector. Iversen, Løge, Jakobsen, Sandvik (2015). Verdiskapingsanalyse av reiselivsnæringen i Norge – utvikling og fremtidspotensial (Analysis of tourism industry value creation in Norway – development and future potential), Menon Economics, Oslo.
GfK Public Affairs & Corporate Communications, 2014. The Anholt-GfK Roper Nation Brands Index SM 2014 Report.