5. Future of domestic tourism in the Nordics

This chapter charts the potential of domestic tourism in the Nordics in future. The chapter begins with a presentation of the views on the future of domestic tourism in the Nordics in general: what kind of expectations are there towards domestic tourism in the Nordic countries and among Nordic tourism enterprises? Are the companies interested in attracting more domestic tourists in the future? In which direction do they expect domestic tourism’s share of their revenue to go?

After this initial presentation, the chapter looks at the reasons behind the expected trends. The country reports and the results of the workshop included views on both potential pull factors and the challenges of domestic tourism in the Nordics. As part of the survey, the participants were asked to identify the most important of those pull factors and challenges. Here, the results are presented and compared with additional insights gained from the interviews in order to gain a comprehensive view of the future of the domestic tourism in the Nordics as well as its advantages and hindrances.

Main findings in this chapter are:

According to the interviewees, there is strong interest in developing domestic tourism in all the Nordic countries and autonomous areas. Covid-19 was described as an eye-opener for the potential that domestic tourism has in the countries. For the future, sustainability and improving the digitalisation of the tourism industry were identified as common themes across the Nordic countries. According to the country reports, tourism industry in the Nordic countries will rely on nature-based tourism products as well as culture-related activities. These are very suitable development trends for increasing domestic tourism in the future. However, country reports raise individual issues such as economic trends and exchange rates of currency, accessibility and weather that affect the views about the growth of domestic tourism.

According to country reports, in Sweden, the future of domestic tourism has not been main interest of the relevant agencies and it is difficult to find sources analysing the matter further. Interviewees point out that economic developments can affect the growth of domestic tourism significantly – if the economy deteriorates, travelling locally will increase. Yet, despite the economic situation, interviewees saw potential for growth in domestic tourism due to hesitation regarding long-distance travel and climate change induced warmer weather in southern Europe during the summer months. Additionally, the trend of nature-based tourism is well recognised in Sweden and can help domestic market to grow.

In Denmark, the volume of domestic tourism has stayed in a higher level after the Covid-19 pandemic. In a survey conducted in the spring 2022, 25 per cent of the respondents said they will travel more in Denmark in the future due to the corona crisis

VisitDenmark and Dansk Kyst- og Naturturisme, 2022, p. 40

. According to the interviews, partly as a consequence of the pandemic, domestic tourism became higher priority to different stakeholders in tourism industry. Many innovative tourism products were created, and marketing was targeted to domestic tourists. More importantly, according to the interviews, domestic tourism sector has become part of national tourism strategies. This increased interest will probably mean that the domestic sector will grow in the future as well.

Finland also focuses on sustainability and digitalisation, but its forecasted growth in domestic tourism is moderate and faces challenges with accessibility and economic instability due to the inflation. Interviewees pointed out the need to develop train and flight connections in Finland, though most of the domestic trips are made by car. Also, interviewees pointed out that the instability, both in household economies and in the general security situation in Europe, makes forecasting challenging and radical negative changes in these themes will inevitably have an effect on domestic tourism in Finland and all over the Nordics. In Finland and in Sweden, the recession and inflation were mentioned as major impact factors for domestic tourism in the interviews.

In Iceland, the interviewees highlighted the shift caused by the Covid-19 pandemic in how significant domestic tourism was perceived, but its market share compared with inbound tourism is still small. There is no analysis of the future of the domestic market, but interviewees pointed out that stakeholder learned much about domestic market during the pandemic. It is still early to say what is the full impact of the Covid-19 induced shift towards domestic tourism, but the interviewees agreed that domestic market will be important in the future for sustainability in the tourism industry and destination development, since domestic tourism tends to be less taxing to the environment and it makes the whole industry more socially acceptable.

In Norway, a forecast expect 45 per cent growth until 2030 for the tourism industry as a whole and that the domestic tourism, especially by local same-day visitors, will be growing  a little faster than inbound tourism.

Menon Economics, 2022, 27.

Recovery of outbound tourism has lowered the number of domestic tourists after the pandemic, though one interviewee pointed out that activities, products and experiences related to food, cultural and historic tourism as well as outdoor activities such as cycling, fishing and archery are thought to be trending in the coming years amongst the Norwegian domestic tourists.

In terms of the future outlook of domestic tourism in the autonomous areas the interviewees emphasised a growing interest, though the possible volume of the domestic market is much smaller compared to other Nordic countries. In Greenland, the long distances within the region challenge the growth of the domestic tourism, but there are initiatives to enhance the infrastructure and build new airports for better access for domestic travellers as well

Høegh Stigsen, 2022.

. In the Faroe Islands, an interviewee saw future potential in domestic tourism as a consequence of price shocks and climate change. On the other hand, he emphasised that there will probably always be a demand to go to other countries among people in the Faroe Islands because of the warmer weather abroad. According to the interviewee, in Åland, domestic tourism will be higher on the agenda in the future, and campaigns created during Covid-19 pandemic, promoting Åland to Ålanders, will continue. The pandemic emphasised that domestic tourism is more important than its small share of total tourism indicates. The residents are a very important target group, and domestic tourists are Åland’s ambassadors outside Åland as well.

The survey results support the generally positive outlook about the future of domestic tourism in the Nordic countries expressed in the interviews and workshop. The open-ended question ‘How do you see the potential of domestic tourism in the Nordic countries?’ was analysed with the help of artificial intelligence classifying the comments’ sentiments as very positive, positive, neutral, negative, very negative or mixed. Overall, 60 per cent of the comments were positive and only 12 per cent were negative. When comparing the share of sentiments in different countries, the results are consistent with the overall results for all the Nordic countries except for Iceland, where the percentage of negative comments was slightly higher (17%), and the percentage of positive comments lower (34%) compared to other countries. (Figure 37). This probably reflects the lower volume of domestic tourism in proprotion to inbound tourism in Iceland compared to continental Nordic countries.

Figure 37. Sentiment analysis of the views about potential of domestic tourists in the Nordic countries.

When analysing the responses in more detail, most respondents recognised many opportunities for growth and development of the domestic tourism in the Nordic countries. The main themes that emerged from the comments include the great potential for growth, especially in relation to nature tourism, culture, and the experience industry. However, the respondents think there is a need for increased marketing and awareness of the destinations and services available, as well as a need for improved accessibility of the destinations.

Nature tourism and the experience industry on that side have good opportunities to grow and develop. Sustainable and summer tourism are on the rise... – Finland, a representative of a business support organisation

There is good potential. There is much that is not found in other countries. There is no need to go far. Comfortable. – Sweden, a representative of a category “other”

Domestic tourism in the Nordic countries is also considered to be somewhat forgotten or undiscovered by locals and vacations abroad in other parts of Europe are seen as more popular:

There is great potential – people of the younger generation are more open minded to unusual destinations for their travels. Iceland, a representative of a private enterprise

The potential is there, but it seems difficult to shift interest from abroad to the interior. Currently, the economic situation is worrying for tourism. – Norway, a representative of a private enterprise

Some respondents pointed out the need for more extensive collaboration with local entrepreneurs and the government. Also, the trend of sustainable tourism is well recognised, and it should be utilised in the domestic tourisms promotion for example highlighting the shorter travelling distances:

The role of the government should be more extensive. Marketing domestic tourism as a tourism of the future is the way to go. Cross-marketing between local entrepreneurs. More possibility for small companies to advertise themselves through official sites. – Sweden, a representative of a private enterprise

The potential is great as the cultural barriers are smaller and as more responsible and sustainable travel will be required – we need to reduce the longer journeys by air, for example. – Sweden, a representative of a DMO

Additionally, some respondents to this question understood domestic tourism in the Nordics to include cross-border travelling to other Nordic countries as well and saw potential in the development of ‘Nordic domestic tourism’ as a common endeavour between different Nordic countries:

There is plenty of untapped potential for domestic tourism within the Nordic region. Why do Norwegians, Danes, Swedes, Finns and Icelanders travel to Southern Europe and many other places when the Nordic region has so much to offer? We forget our common cultural and historical cohesion. It has been diluted over the past 50 years. And now, it must be recovered. – Denmark, a representative of a business support organisation

There is good potential, but we need more information sharing, marketing, common market platforms and especially networking, as well as a larger coordinating body that would promote this cooperation and gather information (e.g. customer preferences). Perhaps clearer products are also needed – why would Swedes want to go to Finland or the other way around? … To deal with these big questions, a large organisation is needed, which has the resources to analyse and develop services together with tourism operators. Some common Nordic tourism strategy or goals – for example, strategies or goals from the perspective of sustainable development – would bring a new impetus to both tourists and operators. Finland, a representative of a private enterprise

The potential of domestic tourism was also reflected in the survey, where there was a strong interest in attracting more domestic tourists. When tourism enterprises in the Nordic region were asked about their interest in attracting more domestic tourists in the future, the majority of the companies expressed interest, with 72 per cent of the respondents choosing the ‘Definitely yes’ and ‘Probably yes’ categories. Only a small proportion of companies expressed disinterest, with 9 per cent of the responses falling into the ‘Probably no’ and ‘Definitely no’ categories. A significant proportion of companies were unsure, with 18 per cent of responses categorised as ‘Hard to say / I don't know.’ The results show no significant differences at the regional level. (Figure 38).

Figure 38. Interest in attracting more domestic tourists in the future.

A third of the responding private enterprises also expected domestic tourism’s share of their revenue to grow in the next three years. The share of respondents who expect the share of domestic tourism to decrease is only 19 per cent. Comparing different regions, Icelandic companies had a higher share in the category indicating that domestic tourism’s share of revenue will ‘stay on the current level’. This reflects the smaller size of the domestic market in Iceland. In Finland the number of respondents who except domestic tourism’s share of their revenue to increase was the highest (Figure 39). This might reflect the fact that the Finnish enterprises responding the survey also showed more interest towards domestic markets and were investing more to development of domestic tourism compared to the pre-Covid situation than enterprises in other Nordic countries.

Figure 39. Expectations of growth of the share of domestic tourism.

According to the interviews, workshop and the survey, there is an increase in interest in sustainable and responsible modes of tourism and in nature tourism destinations. This aligns well with the Nordic region’s unique nature sites, making it an attractive destination for domestic tourists seeking eco-friendly travel experiences. The Covid-19 pandemic has affected international travel, resulting in many people opting for domestic travel and shorter travelling distances instead. This trend is expected to continue even after the pandemic has subsided, though the recovery of outbound tourism means that there is decline compared to the peak levels of domestic tourism experienced during the pandemic. Sustainable development and growth are also recognised as objectives for common Nordic tourism development in Plan for Nordic Tourism Co-operation 2019–2023 -strategy alongside competitiveness, digitalisation and attractiveness

Nordic Council of Ministers 2019.

.

According to the survey results, the most significant pull factors for domestic tourism in the next three years will be an increase of interest in nature tourism destinations (chosen by 51% of respondents), followed closely by an increase of interest in sustainable and responsible modes of tourism (chosen by 49% of respondents).  These two are clearly the most mentioned pull factors. Other factors, such as increase of interest in traveling that is shorter in time, safety and ease of traveling were chosen by one third to one fourth of the respondents. (Figure 40).

There were minor differences between countries. Respondents from Iceland and Finland emphasised the interest towards nature tourism more often than other countries. Sustainability and responsible modes of tourism was the most mentioned pull factor in Denmark and Norway and tied for first place in Finland. When looking at the country-specific responses, the low number of responses from Denmark and Norway must be kept in mind. The question was mistranslated in the Swedish survey form and thus the results are presented without the respondents who answered the survey in Swedish. Yet, the similarity of issues risen across the countries in the survey and in the interviews give credibility to the results even if the number of responses is low in some countries.

Figure 40. Most significant pull factors for domestic tourism in the Nordic countries, share of respondents choosing an alternative.

When asked about the most significant challenges for domestic tourism in the next three years, the most chosen response with 59 per cent was ‘The financial situation of consumers’. Other frequently chosen challenges include ‘Recovered interest in tourism abroad’ at 41 per cent, ‘The quality–price ratio of domestic tourism’ at 34 per cent and ‘A shortage of qualified staff’ at 31 per cent. Challenges such as ‘A lack of know-how in product development or marketing’ and ‘Relatively low market volume/potential’ were chosen by a smaller percentage of respondents, at 13 per cent and 17 per cent respectively. (Figure 41).

When comparing different Nordic countries, ‘The financial situation of consumers’ is the most chosen response in all countries except Iceland, where only 38 per cent of the respondents chose this option compared to 79 per cent in Finland, 68 per cent in Sweden, 62 per cent in Norway and 42 per cent in Denmark. The most chosen response in Iceland is ‘Recovered interest in tourism abroad’ followed by ‘The quality–price ratio of domestic tourism’. Research material does not provide reasons for this difference, but this could be due to the geography of Iceland. Smaller size of the land mass makes travelling domestically less expensive and on the other hand travelling aboard always requires substantial investment in traveling either by air or by water, and hence the economic situation and the exchange rate of krona affect outbound tourism more than domestic tourism.

Figure 41. The most significant challenges for domestic tourism, share of respondents choosing an alternative.

Regarding the challenges, the themes mentioned by the interviewees were quite similar to the results of the survey. Financial uncertainty, high quality-price ratio expectations of domestic tourists, and shortage of staff (especially outside the high season) were themes that came across in many interviews. Another theme somewhat related to the financial situation is the VAT level, which was mentioned to be high especially in Norway and Denmark. In addition, the strict policies and practices regarding alcohol gained some mentions, and some of the interviewees pondered if the peak of high season could be levelled to longer period by altering the current domestic holiday periods.