Implementing Shared Value and Sustainability in the Sicilian Tourist Industry

A collaborative merger of tradition and innovation that will shortly make clean mobility widely available in Sicily inspired the idea to elaborate a “strategic regional plan for shared value and sustainable tourism in Sicily”.

Introduction

gratteri
Gratteri

This paper is a first draft idea of what could become a genuine business model. An idea triggered by a couple of news reports I read recently. One is related to a project that sees ENEL, Renault and Sicily by Car (a car rental company) in partnership to promote an ECO Tour of Sicily exclusively by electric car[1]. The second article relates to what was ultimately fake[2] news about a Chinese corporation buying 100 houses in Gangi[3] (a small town in Sicily) to offer relaxing vacations to its top management.

Although the latter was fake, it highlighted one aspect that characterizes Sicily. It is a region of Italy with an incredible historical heritage, opulent and beautiful architecture, astonishing natural landscapes, and appetizing agricultural products that are the basic raw materials for Mediterranean cuisine appreciated worldwide.

A collaborative merger of tradition and innovation that will shortly make clean mobility widely available in Sicily inspired the idea to elaborate a “strategic regional plan for shared value and sustainable tourism in Sicily”.

 

Shared value as Strategy Plan

The main idea is to develop and implement choices that not only address the customers’ needs (visitors or tourists), but also contribute to delivering a competitive advantage by offering better performance and profitability. In other words:

  1. Define new needs with better solutions which promote differentiation and leveraging price increases;
  2. Deliver existing needs more efficiently to keep costs lower than the benchmark.

Value Created and Captured – Cost of Creating that Value = Margin

To suggest a unique position that creates distinctive value for the customers, it is imperative to define a unique value proposition. This is characterized by proposing a different way of operating and identifying what we are “not” going to do or serve in order to be unique.

A shared value framework would cover three driving forces: efficiency, productivity, and quality. So, we need to focus on three points:

  1. Product and/or service opportunity
  2. Value chain
  3. Cluster/Ecosystem

 

Value proposition

This entails promoting new forms of tourism with innovative products and services that reflect the new social demand (i.e. aging population, healthcare, eco-innovation, low-carbon economy)[4].

From this perspective, Sicily offers a variety of locations and old towns that have conserved their beauty and natural setting. This new way to visit and offer hospitality is oriented towards discovering small towns and villages that have experienced depopulation and have suffered economic hardships.

This innovative approach to regional tourism will:[5]

  1. upgrade the regional production structure towards more competitive sectors;
  2. mitigate brain drain;
  3. eliminate the relocation of innovative companies outside the region;
  4. encourage smart specialization in mature sectors;
  5. increase competitiveness in technology markets;
  6. improve access to financing for innovative projects.

 

Value chain

Although there exists a very large and competitive portfolio of offers[6], there is one that is not identified, namely a business model that is entirely focused on sustainable and responsible tourism.

There are some specific elements that characterize responsible tourism[7]:

  1. minimizing negative economic, environmental, and social impact
  2. generating greater economic benefits for local people and enhancing the well-being of host communities, improving working conditions and access to the industry
  3. making positive contributions to the conservation of natural and cultural heritage and maintaining the world’s diversity
  4. offering tourists a more enjoyable experience through meaningful connections with the local population that enable a greater understanding of their cultural, social and environmental issues

To respond to these strategic choices, it is useful to apply Porter’s Value Chain. In particular, the focus is directed at the following aspects.

 

Inbound logistic:

E-mobility is an enormous step towards zero impact on transportation. Public or private, collective or individual, shifting to an “e-go” system will contribute to reducing CO2 emissions and reduce the cost of transportation (especially when electricity is produced by renewable sources). The vehicles can be used to transport passengers or goods or could be rented for short trips. For the more adventurous, the market also offers E-bikes [8].

Picture1
Figure 1 – Porter’s Generic Value Chain

 

Operations:

Using energy responsibly, through modern LED solutions or generating renewable energy such as solar, would contribute to reducing pollution and cut spending costs. Similarly, water usage needs to be addressed to gain efficiency and reduce waste[9].

 

Outbound Logistics:

Promoting only local raw materials, for nutritional purpose (fruits, vegetables, meat and eggs, milk, powder, and pasta), would raise the quality of meals offered and drastically reduce the production and consumption of any packaging and disposal. Moreover, supporting local producers would increase efficiency in the local economy and would ultimately raise quality and create value.

After-Sales Service:

Any activity should be planned and organized to minimize or create zero obsolescence of products or consumables. For instance, instead of using plastic cutlery and plates, reusable ceramic solutions should be preferred. Furthermore, to minimize the usage of water and detergents, there are some innovative[10] and original[11] solutions that would drastically reduce waste and costs. When any natural site is contaminated with garbage or paved with concrete, and if the concepts of sustainable tourism are not put into action, then each destination will lose its appeal, environmental beauty and ultimately, its profitability[12].

Procurement:

As previously mentioned, finding local vendors for the supply chain would ensure the quality of raw material (freshness and flavor of agricultural products without cold chain constraints, and a short distance from the ground to the table). Furthermore, negotiating the best prices would help to enable local producers to increase efficiency, yields, and sustainability.

Technology Development:

Preserving and converting the real estate of many Sicilian towns[13] would increase the hospitality capacity without building new hotels. Modern technology can be used to render 100-year-old houses energy efficient whilst maintaining the same glamour originally designed for these houses. In agriculture, new machinery and techniques can rejuvenate farms abandoned by young generations moving to the cities or even abroad.

Firm Infrastructures:

As part of the Italian Partnership Agreement signed in 2014, several projects have been funded principally with the purpose of covering the following priorities[14]:

  1. Developing an innovation-friendly business environment;
  2. Putting high-performance infrastructures and efficient management of natural resources in place;
  3. Increasing labor market participation, promoting social inclusion and improving the quality of human capital;
  4. Supporting the quality, effectiveness, and efficiency of the public administration.

Far from relying solely on public aid, it is crucial to maximise the opportunities offered by this financial source. Such opportunities are particularly interesting for start-ups with innovative, but riskier projects, that would be easily rejected by ordinary financial institutions, such as banks.

Cluster and ecosystem

Although Sicily is the biggest region in Italy, despite its 1484km of coastline, regardless of the variegated natural landscape of mountains, hills and plains, the glorious historical and artistic heritage[15], tourism in Sicily represents just 4% of the regional GDP. This is linked to infrastructure issues, seasonality and concentration in a few urban areas[16].

Population and labor market follow the same path with a concentration on the major cities of Palermo, Catania and Messina.

 

Picture2
Figure 2 – Unemployment rate (%) 2008-2013, Sicily compared with other Italian regions. Source ISTAT 2013

 

And yet Sicily suffers the highest level of unemployment compared to the rest of Italy.

Also, there is an unequal distribution of economic activities, with room for improvement in all those sectors interconnected with the tourism industry.

Picture3
Figure 3 – Employment in Sicily by Economic Activity (in Thousand), 2014. Source Eurostat 2014.

 

Conclusion

A significant increase in initiatives towards tourist-related activities would contribute to the positive economic growth of this sector, but also in others like agriculture, forestry and fishing, information and communication, arts, entertainment & recreation.

The implementation of a shared value and sustainable tourism plan for the region would contribute to decreasing the level of unemployment and would finally generate a deserved ROI from the natural and artistic capital inherited from previous generations.

 

References

[1] The Eco Tour Di Sicilia via 200 Renault ZOE Electric Cars. (2017, March 31). Retrieved April 09, 2017, from https://cleantechnica.com/2017/03/31/eco-tour-di-sicilia-renault-zoe/

[2] Gangi, arrivano i cinesi: multinazionale acquista 100 immobili. (2017, April 01). Retrieved April 09, 2017, from http://www.madoniepress.it/2017/04/01/gangi-arrivano-i-cinesi-multinazionale-acquista-100-immobili/. The article was override by the following: Le case del centro storico di Gangi vendute ai cinesi: era un pesce d’aprile. (2017, April 01). Retrieved April 09, 2017, from http://www.madoniepress.it/2017/04/01/le-case-del-centro-storico-di-gangi-vendute-ai-cinesi-era-un-pesce-daprile/.

[3] Gangi, Sicily. (2017, April 06). Retrieved April 09, 2017, from https://en.wikipedia.org/wiki/Gangi,_Sicily

[4] Azevedo, F. (2015, June). ECONOMIC, SOCIAL AND TERRITORIAL SITUATION OF SICILY (K. Mányik, Ed.). Retrieved April 9, 2017, from http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/540372/IPOL_IDA(2015)540372_EN.pdf

DIRECTORATE-GENERAL FOR INTERNAL POLICIES

[5] I. (2017, March 06). Sicily. Retrieved April 09, 2017, from https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/base-profile/sicily

[6] Things to do in Sicily. (n.d.). Retrieved April 09, 2017, from http://en.sicilying.com/

[7] Home. (n.d.). Retrieved April 09, 2017, from http://responsibletourismpartnership.org/cape-town-declaration-on-responsible-tourism/

[8] Company, E. M. (2017, March 27). Energica Motor Company. The Italian electric motorcycle manufacturer. Retrieved April 09, 2017, from http://www.energicamotor.com/

[9] European Commission: CORDIS : Programmes : Enabling the transition towards a green economy and society through eco-innovation. (n.d.). Retrieved April 09, 2017, from http://cordis.europa.eu/programme/rcn/664417_en.html

 

[10] 100% leaf one-way plates – flat rate offer. (n.d.). Retrieved April 09, 2017, from https://www.kickstarter.com/projects/643319217/beleaf

[11] A Spoon You Can Eat Is a Tasty Alternative to Plastic Waste | Short Film Showcase. (2016, July 01). Retrieved April 09, 2017, from https://youtu.be/r4Cc5zmy0eY

[12] Vision. (n.d.). Retrieved April 09, 2017, from http://www.sustainabletourism.net/about/vision/

[13] TALIGNANI, D. G. (2016, May 03). Da Salemi a Ollolai. Borghi in cerca di salvezza a un euro a casa. Retrieved April 09, 2017, from http://www.repubblica.it/viaggi/2016/05/03/news/vendesi_case_a_un_euro_per_salvare_borghi_in_declino-138993489/

[14] Cohesion Policy and Italy. (n.d.). Retrieved April 09, 2017, from http://ec.europa.eu/regional_policy/en/information/publications/factsheets/2014/cohesion-policy-and-italy

[15] Sito dedicato. (n.d.). Retrieved April 09, 2017, from http://unescosicilia.it/wp/?lang=en

[16] Azevedo, F. (2015, June). ECONOMIC, SOCIAL AND TERRITORIAL SITUATION OF SICILY (K. Mányik, Ed.). Retrieved April 9, 2017, from http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/540372/IPOL_IDA(2015)540372_EN.pdf

DIRECTORATE-GENERAL FOR INTERNAL POLICIES

 

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