A “new tourism cycle” on the Canary Islands: scenarios for digital transformation and resilience of small and medium tourism enterprises

Abstract

Purpose

This paper discusses plausible future scenarios for small and medium tourism enterprises (SMTEs) in the “sun, sea and sand” destination of the Canary Islands (Spain) and assesses to what extent they are prepared to adjust to market changes and technological developments in the light of both sudden disruptions and long-term shocks.

Design/methodology/approach

A scenario analysis was made based upon expert interviews, leading to a 2 × 2 scenario matrix.

Findings

Although regional, national and European strategies advocate digital transformation as a step towards building resilience and towards a more sustainable future, this study identifies two major uncertainties that can put that transformation at risk: a change of the traditional “sun, sand and sea” visitor to a more conscious, individual and inquisitive traveller or “Promad”, and the business culture of SMTEs.

Research limitations/implications

Resilience for sudden and for slow-paced disruptions poses different challenges for SMTEs. Their next step in the digital transformation must take them form marketing and sales-oriented e-business to growing interconnectivity and innovation across supply chains.

Practical implications

A market change towards the “Promad” type of traveller causes at least a temporary mismatch of demand and supply. As many SMTEs miss either the knowledge or the resources to invest in digital transformation, the process will depend on support and coordination at destination level.

Originality/value

The study identifies, with the example of the Canary Islands, the difficulties for destinations and individual businesses in making the envisioned transition of mass tourism to more competitive forms of tourism with a smaller ecological footprint.

Citation

Hernández Sánchez, N. and Oskam, J. (2022), "A “new tourism cycle” on the Canary Islands: scenarios for digital transformation and resilience of small and medium tourism enterprises", Journal of Tourism Futures, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JTF-04-2022-0132

1. Introduction

The Canary Islands are a Spanish island group situated at about 100 kms from the western African coast. Especially the main islands, Tenerife and Gran Canaria have seen a rapid development since the 1960s as “sun, sea and sand” mass tourism destinations, differentiated from other European destinations by a year-round favourable climate and, therefore, limited seasonality (Duro, 2016). Spain's construction booms from 1987 to 1993, and 1995–2005 saw the number of accommodation places increase with 34.6 and 9.3%, respectively (Simancas Cruz et al., 2011), totalling almost 400,000 by the end of 2019 (ISTAC, 2022a, b), which makes it the first “sun, sea and sand” destination in the country. From 2010 to 2020, the islands had an average of close to a million international overnight stays per month, plus 137,000 domestic overnight stays (ISTAC, 2022c).

“Sun, sand and sea” destinations are vulnerable to regional competition; an insufficiently differentiated offer has been subject to market fluctuations in the last two decades because of price differences and security issues, although these favoured Spanish destinations in the decade since the Arab Spring (ABC, 2019; Ibáñez de Aldecoa Fuster, 2020). Travel restrictions imposed after the start of the Covid-pandemic caused an acute crisis; Spain declared twice a state of alarm with limited internal mobility (March 14–June 21, 2020 and October 25 2020–May 9, 2021) (Presidencia del Gobierno, 2021). Although open to international visitors during the second period, the Canary Islands were hit by travel restrictions from the United Kingdom (UK) and other source markets. Zero visitor overnight stays were registered during the months of April and May 2020 (see Figure 1); from December 2019 until February 2022, the number of lodging establishments has fallen by 35%, and the number of places by 15% (ISTAC, 2022a, b).

The economy of the islands is dominated by small and medium enterprises (SMEs). In general, 99.99% of all enterprises pertain to this category; in the sector of “services other than commerce”, it is 99.87%, with 96.58% of enterprises in this sector having less than ten employees (Gobierno de España, 2022). At European and national level, these SMEs are considered crucial in innovation and sustainable development (European Commission, 2010; Gobierno de España, 2019). The Canary Islands aim to distinguish themselves for “Intelligent tourism leadership”, increasing the competitivity of its tourism sector through improved diversity and productivity (Gobierno de Canarias, 2020). The regional tourism strategy seeks to strengthen the sector's resilience, support for climate neutrality and capacity to create value for local communities, envisioning a “new tourism cycle” after Covid in which mass tourism will give way to changed visitor habits and digital business models (Gobierno de Canarias, 2021).

Despite the pressing imperativeness from the Canarian regional council and tourism board to impulse the digital transformation in attempts to recover from the crisis and anticipate the new market developments, it can be questioned if the most vulnerable actors that were impacted by this event —small and medium tourism enterprises (SMTEs)—were as equipped for this strategy as larger companies. If this is the case, the proclamations that digitisation is the tool for businesses to persist through the adversities only underscored SMTEs' limited potential to become resilient. This study aims to explore future scenarios for SMTEs in the Canary Islands in the incorporation of digital transformation in their strategy in order to be resilient to future demand shocks.

2. Literature review

2.1 Covid impact and resilience on the Canary Islands

The Canary Islands are an example of the corporate development of mass tourism that emerged in Spain in the 1960s and whose economic, political and social backing until this day has opposed a sustained critique of constant growth (Bianchi, 2017). The main source of its vulnerability is the intense competition around the Mediterranean driven by the market power of tour operators (Falzon, 2012; Jelili and Ebrahim, 2011). Diversification of the offer to include tourist attractions different from sun and beach is therefore considered as a key strategy to increase competitiveness (Marti and Puertas, 2017).

The sudden standstill of economy activity as an indirect Covid impact was far more devastating than expected (Fernandes, 2020; Jonung and Roeger, 2006; Navarro Jurado et al., 2020; Smit et al., 2020). Destinations that were less hard hit by pandemic waves or that took apparently effective measures suffered less steep declines than those that were highly dependent on tourism arrivals (Anguera-Torrell et al., 2021). In the case of the the Canary Islands, tourism monoculture aggravated the crisis, along with the dependence of international markets and of air travel, with the crisis impact only mitigated by the islands' low seasonality (Duro, 2016; Duro et al., 2021). In the discussion about SMTEs’ responses to economic downturns, their resilience is closely connected to crisis management and adjustments in day-to-day operations (Alonso et al., 2020; Gámez et al., 2012), to access to governmental support (Sanabria-Díaz et al., 2021) and to knowledge management within and among organisations (Vargas Sánchez and Rodríguez Toubes, 2021).

In tourism literature, there is no single commonly accepted definition of “resilience” (Hall et al., 2017). Rather than the ability to bounce back after a disruptive event, “resilience” is in general understood as “the ability of social, economic or ecological systems to recover from tourism induced stress” (Alonso et al., 2020; Hall et al., 2017; Tyrrell and Johnston, 2008, p. 16) or a capacity to react and adapt to changes through a capacity to return to a desired state or “flip into a new stability domain” (Petrosillo et al., 2006, p. 106). This can be in response to slow paced as well as to sudden change (Lew, 2014; Prayag, 2018). Ecological and sociocultural stress seems more plausible in the case of mass tourism, even though it can be argued that “alternative” tourism is not necessarily less harmful (Weaver, 2017). For sun and beach destinations, climatic stability is a fundamental requirement that is at increasing risk because of economic and especially tourist activity (Holden, 2017; Dogru et al., 2019). In the case of the Canary Islands, the explosive growth of tourism between 1995 and 2000 has driven up the islands' ecological footprint to 26.94 times the size of its productive surface (Latorre and Del Olmo, 2011). Air traffic accounts for 6.4 million tonnes of CO₂, accounting for 50% of the islands' economic activity (Dorta Antequera et al., 2021).

The need for business innovation to recover from a short-paced shock has been seen by different authors as a “window of opportunity” to also address resilience related to slow paced ecological impacts (Niewiadomski, 2020; Prideaux et al., 2020). Several authors envision a transition to a safer, more sustainable and diversified short-haul tourism (Aldao et al., 2021; Canhoto and Wei, 2021; Florido-Benítez, 2021; Navarro Jurado et al., 2020; Ortega et al., 2020). Thus, the pandemic could signal the beginning of an anti-consumerist restart (Brouder, 2020; Gössling et al., 2020; Gretzel et al., 2020; Sigala, 2020). Others, however, have cautioned against a future vision based on wishful thinking rather than on coordinated international action (Filep et al., 2022; Gössling and Schweiggart, 2022; Hall et al., 2020). Finally, full recovery of global travel and tourism itself is not a certainty, but an assumption based on “hope, inaccurate extrapolations and unscientific interpretations” (Oskam and Davis, 2022).

2.2 Digital readiness and digitisation of SMTEs

Digital transformation is among the main innovations imposed by the pandemic to address both operational issues (low touch contacts and capacity monitoring) and strategic opportunities (increasing market reach) (Gretzel et al., 2020). In manufacturing, this transformation stands for the transition from mass production to mass customisation or “Industry 4.0” (Brozzi et al., 2021), and the assessment of preparedness of SMEs in this sector is widely covered in recent literature (Akdil et al., 2018; Anggraini and Pranggono, 2022; Matt et al., 2019; Mittal et al., 2018; Schumacher et al., 2016; Wiesner et al., 2018). In this sector, SMEs face technical, organisational, human resources (HR)-related and customer-related barriers to digitisation (Peillon and Dubruc, 2019), with a major importance for the latter category as is explained by “ambiguous customer needs, hazy value propositions and difficulties conveying benefits to customers” (Klein et al., 2018, p. 852).

These models, dashboards or key readyness indicators (Brozzi et al., 2021), have hardly transcended to our discipline, with the exception of a report by Dredge et al. (2018). The explanation can be sought in a lower digital maturity, a heterogeneity of objectives, but also in a divorce between the hospitality and tourism disciplines as social sciences, on the one hand, and technological research and development, on the other; a divorce that puts our industry in the backseat of “arbitrary cross-overs” of innovations developed in other sectors or for other purposes (Koerten et al., 2022). Generally in tourism, smart policies are linked to sustainable development objectives (European Commission, 2010; UNWTO, 2021) and destination stewardship (Gretzel, 2022). However, SMTEs show mostly a low to medium level of digitisation, with the medium level of digitisation being defined by the use of, e.g. reservation systems, CRM or web apps, and with low digitisation characterised by uses in, e.g. internal operations, marketing and social media (Dredge et al., 2018). Increased market reach and distribution channel share are immediate goals sought by accommodation providers (Hernández et al., 2021; Lam and Law, 2019; Mitroulis and Kitsios, 2019a, b), with knowledge gaps, cost, focus on short-term benefits but also “unconscious incompetence” as obstacles to innovation (Dredge et al., 2018; Lam and Law, 2019).

2.3 Traveller segments: from mass tourism to “Promads”

The anti-consumerist restart proposed both in scholarly literature and in the regional tourism strategy was envisioned to lead to a tourism that was less spatially concentrated, demographically diverse and with a more evenly spread economic and ecological impact. There is myriad of literature exploring the turn in consumer behaviour from scripted mass tourism towards more authenticity (Boorstin, 2012; Maitland and Newman, 2014; Laing and Frost, 2015; Paulauskaite et al., 2017; Yeoman et al., 2007), the “memorable experience” (Hosany et al., 2022), mindfulness (Stankov et al., 2020) or environmentally conscious and ethically inspired behaviour (Agag and Colmekcioglu, 2020; Crossley, 2017; Ganglmair-Wooliscroft and Wooliscroft, 2016; Kang et al., 2012; Phi et al., 2017). It can be argued, however, that these trends reflect the evolving taste of social classes rather than growing competences of travellers vs tourists (Oskam, 2020). Also, it can be questioned if the conscious traveller contributes to mitigating the harmful impacts of tourism itself (Fusté-Forné and Jamal, 2020; Liggett et al., 2011).

During the Covid pandemic, the interest in attracting these types of travellers increased not only as an opportunity for a sustainable restart but also as an economic necessity to spread the risks of tourist monocultures. In particular, long-term stays of teleworkers seemed a remedy for the ailments of now desolate tourist destinations (Zoğal et al., 2020). In business publications, this ideal and life-saving traveller type was described as “Promad”, “(read: progressive nomad) […] more conscious than ever of the impact of their travels on the environment, welcoming the emergence of a new attitude to travel […] embracing new technologies, innovations, and disruptions at a time when major societal topics are being debated: overtourism, demographic transformation, jet flight restriction, expanding connectivity, race diversity, and gender equality” (Design Hotels, 2020).

3. Method

Faced with the unpredictable aftermath of a disastrous sudden change in tourism markets, the choice was made to use scenario planning to envision permanent long-term effects rather than looking for short-term crisis management measures (Yeoman and McMahon-Beattie, 2005). This study follows the deductive methodology in which plausible scenarios are derived from high impact uncertainties (Enger et al., 2014; Van der Heijden, 2005; Yeoman et al., 2015). The developed scenarios are not meant as predictions of the future, but as a way to stimulate the strategic dialogue, thus contributing to the resilience of the community to external impacts (Oskam, 2022).

This scenario study explores the potential of SMTEs on the Canary Islands by 2030 to undergo or lead the desired “digital transformation” as a solution to guarantee their resilience. Information on stakeholders' conscious and implicit insights into this potential is collected by interviewing stakeholders on the subject. Thus, the study aims to challenge practitioners' main assumptions and to explore whether the digital transformation is the answer to ensure the level of resilience of SMTEs in the Canary Islands by 2030. The goal is to identify all other unexplored variables that must be controlled by SMTEs, which could have a higher level of impact on their resilience and thus lead to alternative solutions.

Besides insights from a variety of sources including grey and academic literature, scenario studies include an “elicitation process” in which stakeholders discuss insights (intuitive or otherwise) into drivers of change (Van der Heijden, 2005, p. 167). Different techniques are used in these elicitation processes (Lindgren and Bandhold, 2009), among which interviews with experts (Van der Heijden, 2005; Yeoman and McMahon-Beattie, 2005; Yeoman et al., 2015), the goal of which is not data collection and theory building around existing phenomena, but rather exploring “the complexity of the question” and accepting “the diversity of perceptions on a topic” (Yeoman et al., 2015, p. 119) in order to allow for creativity in the scenario building process.

This “strategic conversation” was held through 11 semi-structured interviews with industry stakeholders and “individuals who are not normally part of the strategic conversation” or “remarkable people” (Yeoman and McMahon-Beattie, 2005, p. 279), who pertained to different fields of expertise within the tourism industry and digital transformation in the Canary Islands. At the same time, they act as impacted stakeholders as they are all residents of the Canary Islands and domestic travellers. Lastly, some are or were working professionals at a SMTE or work closely with SMTEs. Besides open-ended questions, interviewees were asked to rank the degree of importance and uncertainty of the identified drivers for SMTEs to take part in the digital transformation (Hyman and Sierra, 2016). Each interview lasted approximately one hour.

Starter questions were formulated to stimulate discussion during the interviews. Answers were then laddered and probed in order to explore insights in depth and identify key drivers (Van der Heijden, 2005):

1. How would you describe the future tourism proposition in the Canary Islands as you believe it will be by 2030?

2. Is the digital transformation of tourism enterprises a possibility or a necessity in the Canary Islands?

3. In order to guarantee the resilience of SMTEs, what trends in tourism other than sustainability and digitisation will be important to control to be able to compete in the tourism sector as a SMTE?

4. What are the main barriers SMTEs are faced with that are impeding them to get onboard with the digital transformation?

The 11 interviews were recorded and manually transcribed by the researcher. The researcher followed the data analysis method of Gioia et al. (2013) in which a cluster analysis was done by grouping the raw qualitative data from the transcribed interviews into common concepts that helped identify what could possibly influence the level of resilience of the SMTEs in the future (Gioia et al., 2013) (see Table 1).

The process of identification involved filtering and grouping common opinions and statements from all transcribed interviews, which were then categorised under the main themes derived from the research question:

1. The future tourism proposition in the Canary Islands.

2. The future tourism perception of technologies within the tourism sector.

3. Trends impacting the tourism industry.

4. External and internal uncertainties.

5. Difficulties faced by SMTEs to lead the transformation.

This process was done manually. From the abovementioned concepts, 17 reiterated themes were identified across all sources. These were the drivers interviewees identified to have an impact on the level of resilience of SMTEs by 2030. These were colour coded per concept to identify the root of their development. The name for each driver was given by the researcher. At this stage, the drivers of change were not ranked in any particular order.

The drivers of change were then ranked by the interviewees' assessment of their degree of certainty (how likely the driver is going to be present in the next ten years) and importance (how significant the impact of the driver is on the resilience of SMTEs). The ranking allowed considering the most crucial drivers businesses must consider in their vision of what their future resilience will depend on.

The classification was based on the reiteration across all interviewees on the level of influence the forces have on the resilience of the SMTEs. The drivers were funnelled down further to those that were reiterated the most across all interview drivers of change.

4. Findings

The following drivers were identified:

4.1 The future tourism proposition in the Canary Islands

Tourism demand dependency on tour operators: In addition to a limited adoption of digital commercialisation and distribution among SMTEs, interviewees argued that the demographics of visitors to the Canary Islands contributed to the dominant role of traditional distribution channels.

Traditional offer vs a sustainable and modern hotspot: Seven interviewees reasoned that while there are efforts to change the promotion of the Canary Islands to a destination that is more sustainable by diversifying its offer and integrating smart technologies, the activities in place at the moment are marginal to outshine the solid offer of “Sun, Sea, Sand” as we see patterns in tourists' behaviour which are looking the same as prior to the pandemic. “The tourism model in the Canary Islands is built around a very clear concept, which requires a lot of effort and changing an inertia almost impossible to achieve” (Interview 7).

4.2 Expected adoption of technologies within the tourism sector

Adoption of e-business and digital distribution: In order to define the appropriate use of technology in a business, interviewees agreed that decisions regarding e-business (defined by Dredge et al., 2018, as a process occurring in individual SMTEs and focused on sales and marketing) were dependent on the type of client and on market positioning. The only exception was made with digitally commercialising the business on the Internet.

Accelerated by COVID, interviewees believed that the migration of mobile technologies to consult the information, availability, price and provision of businesses' services is becoming more usual for all travellers and consumers, independently of their tourist profile. As we currently see and anticipate permanent changes in the future traveller habits towards these digital options, interviewees considered e-business should not be contemplated as a possibility but rather an obligation for businesses to “exist on the map”.

Adoption of technologies to create a sense of security: The rapid transition to digital menus in restaurants, accessible via QR codes, is mentioned as an example of technology adoption accelerated by Covid.

Adoption of technologies to enhance customer experience: Although particularly the self-check-in is considered a desirable option to offer, the interviewees show scepticism about the need to digitally enhance the “sun, sea and sand” experience, and some underscore the importance of human interaction as opposed to digitisation.

4.3 Trends impacting the tourism industry

“The Promadic Traveller”, embracing conscious tourism: The expected change in demand is what interviewees deemed to be the most important factor to control, considering how different the profile is presented in comparison to the conventional traveller. The different needs would imply reinforcing businesses' value propositions to attune to the needs of the new demand.

There is a necessity to explore secondary or less massified spaces, where the tourist feels part of the destination (Interview 10).

Driven by the effects of the pandemic and the risen concern on sustainability, the Promad wanting to visit the Canary Islands is expected to embrace conscious tourism, with a higher awareness on how their actions impact the destination on a social and environmental level. With a highly inquisitive character, the Promad seeks to sustainably indulge themselves in authentic local experiences, fleeing away from the clutches of mass tourism characteristic in a “Sun, Sea, Sand” destination.

The Canary Islands are also betting on teleworkers, because they are hybrid tourists and workers who are more conscious about their environment. They are also more willing to explore, not only the southern part of the island which is the tourist area but also moving around other parts of the island (Interview 6).

What I also noticed, like during the corona time, suddenly there are so many cars with Dutch license plates, German license plates, Swiss, Sweden. You know, I felt like so many people just took off with their car, during the pandemic. It's like “I'm going to be here for a while and then I drive back.” People are becoming more independent (Interview 11).

Big data: The importance of even simple insights in visitor behaviour is recognised, despite factors as company size (the fact that SMTEs in general have a better knowledge of their client) and the more homogeneous expectations of the traditional tourist.

“Flight shame”: The growing awareness of ecological footprint as a general trend among travellers and the increased reluctance to travel by plane is considered a factor that, in the long run, may affect visitor numbers.

Digital vanguardism: The growing importance of tech-savvy travellers whose desires and expectations must be met by a digital infrastructure in the accommodation and destination.

4.4 External and internal uncertainties

Rapid advancements in technology: The speed of innovation is considered a source of uncertainty for SMTEs.

Pandemic rebound and travel restrictions: At the time of the interviews, the Canary Islands had a “red” travel advice in source countries such as the UK and the Netherlands. Travel restrictions were therefore mentioned as a further uncertainty beyond the control of the destination and its SMTEs.

Availability of funds: Innovation programmes and initiatives were seen as contingent upon the availability of government support and, in particular, European funding.

4.5 Digital transformation hindrances for SMTEs

Financial shortfall: The postponement of investments or impossibility to invest in innovation because of the crisis.

Unfortunately, I think that the tourist sector will come out of this crisis with a hefty burden after two years of Covid standstill … Business model changes take time, and at the moment with the entire sector debt-laden I do not know if there will be many organisations that can afford to look further than the short term. (Interview 9).

Digital illiteracy: Insufficient technological know-how, not only in SMTEs but also in certain visitor segments.

Business maturity, digital natives vs digital immigrants: The technological disadvantage of established companies that operate in the traditional market, compared to emerging companies whose business model, has incorporated the latest digital innovations.

Business culture, progressive mindset: Digital transformation is considered key to ensure SMTEs' resilience in the Canary Islands only after deconstructing the meaning of the concept. The mentioned barriers to the transformation were all dependent on the businesses' attitude and capacity to adapt:

The digital transformation does not only consist of the technological component. The digital transformation starts with the people who work in that business. A change of mentality. A change in the way we do business (Interview 5).

Digital transformation is thus considered to be based on processes of digitisation, or the application of technological tools in organisational and commercial processes as well as in the improvement of the product and service; and on organisational transformation, understood as a remodelling of the organisational mindset (business culture) and talent with a continuous learning approach. In other words, it is a misconception that the success of this transformation is entirely dependent on the integration and type of technology we see in a business. The business culture is deemed to be the most crucial ingredient that will allow SMTEs to sustain disruption and changes in their environment that hinders their resilience. By business culture, interviewees commonly referred to SMTEs' change of mindset, showing behaviours of continuous learning and openness to change and improvement, leaving traditional operations behind and introducing an entrepreneurial mindset through sustainable innovation on a social, economic and environmental level.

Accessibility to professional support and consultancy: Several interviewees considered innovation initiatives as contingent on the available expertise and the corresponding (European) funding.

5. Important drivers of industry development and scenario matrix

The drivers of change were ranked by their degree of certainty (how likely the driver is going to be present in the next ten years) and importance (how significant the impact of the driver is on the resilience of SMTEs). The classification was based on the reiteration across all interviews on the level of influence the forces have on the resilience of the SMTEs. These were funnelled down to the following drivers:

1. Prevalent strategic choices in the SMTE ecosystem: either evolving business cultures in which innovations and continuous learning are embraced or a more conservative attitude that sticks to the “goose with the golden eggs” of mass tourism.

2. Market trends and repositioning of the destination: the prevalence of more individual and adventurous travellers and the ability of the destination to transform its image based on “sun, sea and sand” to one of a sustainable and modern hotspot that succeeds in attracting this “Promadic Traveller”.

With these drivers, a scenario matrix was created with the purpose of showing plausible future outcomes of the choices of different stakeholders with a maximised “spread” (Van der Heijden, 2005), illustrating the resilience or vulnerability to external shocks that would result from strategic decisions. The scenarios are fictional narratives of the future created by the researcher. For communicative purposes, the name and colour per scenario follow the symbolic of beach warning flags, familiar in a “sun, sea and sand” destination, metaphorically illustrating how endangered the resilience of SMTEs would be when being positioned in any of the scenarios; thus, the findings seek to strengthen stakeholder engagement and to underscore the urgency for action (Yeoman et al., 2015) (see Figure 2).

Scenario 1: Moderate currents (medium hazard). The sea presents moderate currents. Although the SMTE is attuned to the new needs of the current demand, it faces the challenge of operating in a new, highly dynamic and competitive environment. Hence, the continuous learning and awareness of trends in the internal and external environment, and creation of agile methodologies that adapt to the demand is an exhaustive cyclical process for the SMTE to be able to upkeep with competition, the trends and expectations of the new traveller.

The ability to rapidly respond to the demand while coping with the pressure to work in a dynamic environment underlines the difficulty of sustaining the resilience of the SMTE in this scenario as it requires consistency in the analysis and innovation of business strategies on their behalf. Here, the new demand presented as the “Promadic” traveller is eager to discover uncharted places and offers of the islands beyond the commercially exploited areas and activities of the destination that majorly cater to a demand interested in the “Sun, Sea, Sand” offer. In light of this new demand, offering conventional experiences to a homogeneous target market known as the traditional “sun and beach” demand takes a backseat in the SMTE's business value propositions. As a response to this demand, the SMTE is able to microsegment their target market and continuously review and articulate their business positioning to an emerging market niche.

Scenario 2: Calm conditions and exercise caution (low hazard). The sea presents calm conditions but calls to exercise caution. The SMTE is operating in a safe and familiar environment which does not make it urgent for businesses to make changes in their product/service offerings; they are running favourably as they were before the pandemic because the demand resembles that of 2019. The traveller is anxious to come back to the islands and travel in masses. The traveller's main driver to go to the islands continues to be the enticing combination of rest and recreation and is satisfied with the traditional product/service offerings of the SMTE.

Nevertheless, the SMTE has a robust understanding on the imperativeness to be flexible and responsive to unforeseen developments in the demand. Hence, it continuously analyses its current business proposition against the behavioural patterns presented by the future traveller. The anticipation to read signs of changes in traveller behaviour allows the SMTE to have a clear vision of the future and prepare different contingency plans, adopting the right internal business strategies to meet the demand. This anticipation allows the SMTE to be ready to seize opportunities and cope with unprecedented variations in tourism trends ahead of time, making them less vulnerable to the changes in demand.

Scenario 3: Strong currents (high hazard). The sea presents strong currents. The SMTE is presently operating under a safe and familiar environment. The demand's profile and turnover are the same as before 2020. The frequent traveller continues to prevail, mostly coming from Nordic countries, the UK, Germany and the Spanish peninsula, with an average age of 47 years and an average purchasing power in their country of origin. Par excellence, the value proposition of the islands in terms of climate, tranquillity and security has an effect on the activities carried out during the stay. These are limited to rest, the enjoyment of hotel facilities and other expenses related to local gastronomy. This traveller has less of an inquisitive character in comparison to the new demand as they are more inclined to buy from the SMTEs that they already know and like.

The SMTE's mindset to live by the day, reliance on present successes and risk avoidance is what drives their nonconfirmative attitude towards change. However, operating with no sense of long-term projection in the business strategy highly endangers the business as any disruptive changes in the environment will distort the reality the SMTE currently lives by. Not recognising signs of changing demands positions the SMTE in a vulnerable stand facing sudden collapse. Thereafter, entrepreneurial anxiety, lack of preparation and resources can be pivotal on the continuity and the resilience of the business in the sector.

Scenario 4: Dangerous marine life spotted. The sea presents maximum danger. The profile of the new traveller is characterised by a preference towards experiences away from the clutches of mass tourism, with sustainability and authentic experiences at the forefront of their minds when deciding in which activities to partake and from whom to buy the products and services during their stay at the islands.

In this scenario, the “Promadic” traveller views the current positioning of the SMTE through the lenses of cynicism. The SMTE's operations still cater to the conventional demand of “Sun and Beach”. The standardised offerings of products are overshadowed by the big players in the industry with similar propositions as well as by other SMTEs with a stronger proposition with their differentiation that uniquely cater to the “Promad's” needs. The inability of the SMTE to anticipate the signs that this new demand was emerging has them drowning in a competitive environment as they were not ready on time to adjust their internal resources to cater to the new traveller's needs.

6. Discussion

The abrupt impact of the Covid pandemic on tourist monocultures such as the Canary Islands, spurred an immediate need of innovation and digitisation, but also a wave of wishful thinking in academia and among policymakers. This scenario study has sought to give insight in plausible outcomes if the ideas of such a sustainable restart were implemented. The fragmented nature of the tourist industry and the predominance of SMTEs in the sector makes the future effects of a strategic change at destination level highly unpredictable. This paper identifies four potential outcomes, which are not meant as predictions for the future of SMTEs, but as extreme alternatives that may play out simultaneously and to different degrees.

The extent of market changes and the level of preparedness of SMTEs for digitisation are the variables that need to be monitored if a destination aspires to implement a sustainable “restart” strategy. The first factor depends on strategic choices, but also on conditions beyond the control of policymakers and SMTEs —e.g. pandemic travel restrictions and climate change—; anticipation of plausible futures must help stakeholders weigh the consequences of each choice. The second variable, preparedness of SMTEs for innovation and digitisation, predicts which business will survive and which ones will fail. The difficulty is that our discipline has only rudimentary assessment models for digital readiness of SMEs. Without a sound understanding of the status of this variable, destinations that pursue a digital transformation strategy venture blindfolded into the unknown.

The Covid crisis almost overnight coalesced the ideas of long-term resilience to ecological challenges, such as climate change, and the capacity to respond to immediate crises, by proposing to use the pandemic as an opportunity for a sustainable restart (Oskam and Davis, 2022). However, the fact that this has so far turned out to be mostly “wishful thinking” (Gössling and Schweiggart, 2022; Hall et al., 2020) is not the result of bad intentions, but rather of an inertia that is inherent to the small business nature of our industry. Whereas in the area of manufacturing, there is some consensus about the implications of “Industry 4.0”; our discipline still misses a clear vision of desirable and plausible versions of future digitised restaurants and hotels, and therefore lacks assessment models of digital readiness, supporting investments in technological knowledge to develop solutions rather than incorporating them from other sectors.

7. Conclusion

This scenario study has identified four extreme directions for the future of SMTEs on the Canary Islands, determined on the one hand by the adaptive capacity present in the business culture of each organisation and on the other by demand changes from a traditional “sun, sea and sand” market to the “Promadic” traveller. The alternative scenarios show a widespread unpreparedness for the consequences of the changes proposed in academic circles (Brouder, 2020; Gössling et al., 2020; Niewiadomski, 2020; Prideaux et al., 2020; Sigala, 2020) and at destination level (Gobierno de Canarias, 2021) to cope not only with the risks of tourist monoculture as revealed by the Covid crisis, but at the same time with long-term environmental threats. This does not change the need to move towards a more sustainable tourism model; but the inertia that other authors cautioned for (Gössling and Schweiggart, 2022; Hall et al., 2020) could have been anticipated and may in the long run be addressed, with the insights of these scenarios.

Digitisation is considered to be a component of sustainable strategies (European Commission, 2010; UNWTO, 2021) and at the same time, a necessary innovation that was accelerated by the Covid pandemic. A wide range of different innovations and automations is grouped under this digitisation. This anticipation of future scenarios for the digital transformation of SMTEs requires a common understanding —at least at destination level— of what this transformation entails. This common understanding would allow a regional strategy to identify the required support measures for SMTE stakeholders. So far, the report by Dredge and al. (2018) is the only attempt to provide a “digital readiness” assessment model for our sector. It will take more academic discussion, but probably also more technological maturity and initiatives for sector-specific innovation to support small and medium-sized hotels and restaurants in destination-level strategies.

8. Practical implications

Business survival in tourism requires resilience to adapt after fast paced, immediate disruptions but also against slow paced crises such as climate change. A strategic choice for a type of tourist with a low ecological footprint, without sacrificing the economic benefits of mass tourism, would potentially increase both the sustainability and the competitivity of many “sun, sea and sand” destinations. But it is almost unavoidable that such a change creates, at least temporarily, a mismatch between supply and demand. Coordination and support at destination level is required to ensure that SMTEs can participate in this transition as many miss the knowledge and the resources to make the next steps in the digital transformation process.

9. Theoretical implications

This study was conducted at a moment when concerns for resilience to fast-paced disruptions superseded those of long-term adjustments in tourism markets. It thus illustrates the interplay between the different paces and scales of tourism resilience (Lew, 2014; Prayag, 2020) and demonstrates that those differences are not necessarily supportive of a post-Covid “re-set” (Niewiadomski, 2020; Ortega et al., 2020; Prideaux et al., 2020). The study concurs with the conclusion of Dredge et al. (2018) that for SMTEs to set the next step in digitisation that will lead them to growing interconnectivity and innovation across supply chains, destination level coordination is required, as well as support such as “network capacity building and mentoring programmes” (p. 28). However, it also shows that there is a limited and confused understanding of what the digital transformation will imply for SMTEs; the development of this understanding will be imperative for the assessment and promotion of digital readiness in our sector.

10. Limitations and future research

As in any scenario study, the main limitation is that its findings do not present empirical analyses of phenomena that have occurred, but are meant to facilitate strategic action. Even though different stakeholder perspectives were consulted in the study, their views and opinions are not representative of views of SMTEs or even of the heterogeneous destinations in the Canary Islands. The authors suggest a longitudinal monitoring of demand shifts to sun, sand and sea destinations as well as research on SMTE business success and failure in the post-Covid era as avenues for further research. More detailed insights on where businesses and destinations stand in the “journey to digitalization” proposed by Dredge et al. (2018) will help operationalise the four scenarios and design responses and policies at meso- and macro-level.

Figures

Figure 1

Monthly overnight stays Canary Islands

Figure 2

Scenario cross for the future evolution of SMTEs on the Canary Islands

Table 1

Expert interviews

Interview	Position	Company	Company size
1	Marketing Director	IT services and IT consulting	51–100
2	Recruiter	Hospitality education group	>1,000
3	Digital Transformation and Innovation Manager	Training and consulting for SMEs and entrepreneurs	51–200
4	Consultant in business technology innovation	Hospitality education	51–200
5	Consultant in business technology	Technology advice	11–20
6	Policymaker	Governmental agency	11–50
7	Educator/researcher	University	>1,000
8	Consultant	Business technology innovation	11–20
9	Policymaker	Governmental agency	21–50
10	Consultant and entrepreneur	Sustainable business innovation; tourism-related digital solutions	11–20
11	Resident	N/A	n/a