Édition #5

Productivity in tourism

Sylvain AUDET Recreational tourism consultant, Lecturer in tourism, School of Management (ESG), Université du Québec à Montréal (UQÀM)
Clément LE DILY Master's student in Tourism Development, School of Management (ESG), Université du Québec à Montréal (UQÀM)
According to the Organisation for Economic Co-operation and Development (OECD), tourism is one of the key sectors for economic development (2.1% of GDP and 3.9% of the workforce in Canada in 2018)¹ and the way a country is perceived internationally, as well as a major source of revenue, jobs and wealth for countries.

WHY DO WE TALK ABOUT PRODUCTIVITY?

Measuring productivity in tourism2 & 3 is a concern at different levels of government, in order to make decisions on government aid (e.g. subsidies). In terms of productivity, numerous indicators have been created to develop competitiveness criteria. However, despite these efforts, the measurement framework remains inadequate.

Several factors, both internal and external to the sector or company, influence competitiveness and can change rapidly. Moreover, a study by the Business Development Bank of Canada indicates that SMEs are less vulnerable to the economic context when they give priority to productivity. According to the study, Canadian SMEs are currently facing three challenges that threaten their growth:

» Significant inflationary pressure.
» A severe labour shortage across all sectors.
» A disrupted supply chain.

The study shows that increasing productivity has become relevant for all sectors and all companies 4.

WHAT IS PRODUCTIVITY?

The concept of productivity is broadly described and accepted as the relationship between the quantity produced and the resources used in the course of production. It encompasses the way in which businesses transform input (such as raw materials, labour and capital) into output (products, services or tourism experiences).

For information purposes, the Quebec Ministry of the Economy, Innovation and Energy measures productivity5 as follows:

The ultimate aim of calculating productivity is to increase the financial profitability of the company and its shareholders.

WHAT IS PRODUCTIVITY IN TOURISM?

In the context of tourism, and without really attempting to define the term “service”, Charles Martin Jr6 highlights several important points to note concerning aspects of services when we talk about productivity.
The first is that of visitors, who play a role in the production of his service: they therefore go beyond their initial function as a consumer. This is even more relevant in the tourism industry, which bases its operations on the creation, sale and consumption of experiences7, where these experiences are produced and consumed simultaneously: so it is then a question of co-creating the tourism experience.

Without visitors, there is no tourism experience, and if we bring this back to the concept of productivity, this means not only an absence in the calculation of input, but also of output. If the visitor is an active part of the experience production process, then they could also potentially be considered as a form of input. As summarised in Figure 1, productivity calculations only include elements that are within the company’s control. They do not take the visitors’ contribution to the creation of unique tourism experiences into account.

PRODUCTIVITY OF THE DIFFERENT TOURISM SECTORS IN QUEBEC

In order to measure and compare tourism productivity in Quebec, we have identified four sectors of the Canadian and Quebec tourism industry. As Graph 1 shows, there is a relatively large gap between the productivity of these different tourism sub-sectors in Quebec. The food and beverage services sector appears to be less productive than the accommodation services.

There are two possible reasons for the apparent lack of productivity in the food and beverage services sector. The first is that it has to be labour intensive to deliver a positive, quality food and beverage experience. The second is that this sector does not appear to maximise the use of the available workforce and technology.

Similar comparisons can be made for the productivity of these sub-sectors in 2022: we can observe that the productivity of leisure and entertainment services fell by 28.3%, making this the least productive tourism sector in Quebec. We can also see that the “Arts, sports and heritage” sub-sector saw its productivity fall by 18% in 2022. It is important to note that productivity fell slightly between 2019 and 2022, despite an improvement in productivity in the accommodation and food services sectors.

 

THE DIFFICULTY OF MEASURING THE PRODUCTIVITY OF SKI RESORTS IN NORTH AMERICA

As we saw in the Mountain[s] Trend Book #39, the structure for managing and proposing a resort experience in Europe is very different to that in North American ski resorts. In Europe, we find a more fragmented model (a “Community Model¹0“), which means that the visitor has to deal with several independent companies scattered throughout the resort to obtain different ski- or snowboard-related services. This is not the case in North America with the “Corporate Model¹¹“, where visitors find all the services in the same place (under the same roof) and under the same administration.

This “Corporate Model” organization of the overall experience means that the ski resort manager has to manage a range of different services. They are assessed mainly on the overall performance (i.e. mainly the financial performance) of the mountain’s operations and less on the individual performance (i.e. the financial performance and productivity) of each department.

The challenge of developing a single productivity ratio for a ski resort, which would take into consideration the specificities of the different departments, does not exist.

The difficulty lies firstly in the diversity of the tourist activities proposed in a ski resort and secondly in the nature of the skier’s or snowboarder’s experience. This experience includes several intangible elements: the welcome offered by staff, the services consumed, the reliability of the ski lifts, the quality of maintenance of the slopes, the cleanliness of the buildings, the outside temperature, etc.

A DIFFICULT COMPARISON

Measuring the productivity of different major tourism sectors may seem relatively easy. However, the indicators presented are on an annual basis. They do not take the seasonal aspect into account, i.e. periods of inactivity (business closed) or reduced activity (low season), or changing weather conditions (lack of snow, intense cold, rain, etc.), which influence visitor numbers.

This is even more true for ski resorts, which, by virtue of their geographical location and the nature of their activities, have to cope with a few months of high visitor numbers, followed by quieter periods, despite the diversification of mountain activities outside the winter season. Tourism productivity indices are often calculated over twelve months, even though 80% of activity is concentrated over three months. The productivity indicator takes the annual balance sheet into account, a figure that must be qualified if we consider that it is only supposed to ‘produce’ for a limited period.

In the absence of a precise indicator, using the formula presented above, the operators of any tourism business can develop their own productivity indicators and monitor them from one year to the next. Although the indicators are not perfect, they provide managers with relevant information on a company’s productivity and profitability.


1 OECD (2020), OECD tourism trends and policies 2020, OECD Publishing, Paris, www.doi.org/10.1787/fa567e9c-fr. Consulted September 2023.
2 This article is part of Clément Le Dily’s research internship at the Quebec Tourism Human Resource Council (CQRHT) and was funded by MITACS.
3 Thanks to George Tanguay, professor in the Department of Urban and Tourism Studies at the School of Management (ESG), Université du Québec à Montréal (UQÀM) for his comments.
4 Adapted from www.bdc.ca/fr/a-propos/ centre-des-medias/communiques-presse/selon-une-etude-bdc-entreprises-quiameliorent-leur-productivite-subissentmoins-effets-linflationperturbationschaine-
dapprovisionnement. Consulted August 2023.
5 Quebec Ministry of Economy, Innovation and Energy: www.economie.gouv.qc.ca/bibliotheques/strategies/offensive-detransformation-numerique/declaration-surles-indicateurs-de-performance-de-lotn. Consulted August 2023.
6 Martin Jr, C. R., Horne, D. A., & Chan, W. S. (2001). A perspective on client productivity in business‐to‐business consulting services. International Journal of Service Industry Management, 12(2), 137-158. Consulted July 2023.
7 Pine, B. J. & Gilmore, J. H. (2011). The experience economy. Harvard Business Press. Consulted July 2023.
8 Statistics Canada. Table 36-10-0480-01 – Labour productivity and related measures by industry in the business sector and by non-commercial activity, consistent with industry accounts. Consulted July 2023.
9 Audet, Sylvain (2021). The governance and business models of the North American ski resorts. Mountain[s] Trend Book #3, Edition 2021-2022, 49-55. www.clustermontagne.com/wpcontent/uploads/7474-Cluster-Montagne_Cahier-de-tendances3.pdf. Consulted August 2023.
10 Idem
11 Idem

Sylvain AUDET
Sylvain AUDET
After holding various positions in tourism companies in the Eastern Townships (Quebec), Sylvain has been working as a consultant in recreational tourism in Eastern Canada for over 25 years. He has developed extensive expertise in business development, benchmarking and business planning in the tourism sector and, more specifically, in the sector of snow sports.
Clément LE DILY
Clément LE DILY
After completing a Master’s degree in Tourism Studies at the Arctic University of Norway (UiT), he continued to accumulate professional experience before coming
to Quebec to complete his training at UQÀM with a Master’s degree in Tourism Development and Management, for which he is looking into productivity issues.