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Rural businesses in the tourism sector

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Tourism is often a stimulating economic sector for rural regions facing scarce employment and business opportunities. Barriers to economic development are mainly related to a too strong reliance on traditional activities, a weak cross–fertilisation between different sectors and stakeholders, and a lack of tools to stimulate SME innovation.

The partners in the Interreg Europe project RuralGrowth have exchanged their practices on how to focus on reinforcing the competitiveness of rural businesses in the tourism sector to find solutions to those barriers.

In the involved regions, almost 30% of all SMEs are relevant to the visitor economy sector. The upgrade of the hospitality sector and connected traditional rural activities is crucial, but boosting the visitor economy also brings benefits for sectors that indirectly support tourism such as agriculture, processing industry and various services, resulting in creating new local jobs and infrastructure developments benefiting visitors and inhabitants alike.

Beyond economic development, the RuralGrowth partners also aim for sustaining vivid local communities able to preserve the integrity of the natural environment as well as cultural assets. A sustainable visitor economy not only facilitates the growth and competitiveness of local SMEs but also contributes to all aspects of sustainability.

Comprehensive policy improvements in Savonlinna, Finland

Savonlinna is a city of around 35.000 people in Eastern Finland, in the lap of lake Saimaa. It is represented in RuralGrowth by its economic development agency Savonlinna Development Services Ltd.

Building on the exchanges initiated with the partners of RuralGrowth, Savonlinna Development Services Ltd managed to get funding approval and implement no less than three projects with significant budget allocation:

  • The ROIHU project, a start-up coaching project with the aim of establishing a growth path for SMEs from business idea to scalable business models. The project was inspired by the Newcastle University, Advisory partner in  RuralGrowth and developed in cooperation with XAMK - South-Eastern Finland University of Applied Sciences. The project involved about 2.000 prospective or new entrepreneurs in events, seminars, and business training sessions. 53 newly established businesses and 7 new start-up companies aiming for international market were coached. It was closed by 30.9.2020 with total public funding (ESF) of € 865 270.
  • The PAMU Savonlinna (service design for tourism and visitor economy sector) project was ongoing with an allocated funding (ERDF) of € 526 248 until 30.06.2021. It is implemented jointly by Savonlinna Development Services, XAMK and Samiedu vocational institute. The project has involved over 50 SMEs in coaching and contributed to the design of over 40 service concepts.  
  • Digiportaat (Digisteps) is about facilitating the adoption and use of digital distribution channels in rural SMEs. The project is not targeted exclusively for SMEs in the visitor economy, but a course offer has been developed with the view of serving specifically companies involved in hospitality and tourism. Thanks to its success, the project was extended until 31.12.2021. Already 374 SME participants and 131 business advisors have been trained. The total allocation (ESF) was raised from € 1.290.000 to € 1.750.000.

The lead partner of the project is XAMK, working jointly with the regional development companies in Mikkeli and Savonlinna, ProAgria (Finnish expert organisation for rural entrepreneurs) and the Entrepreneurs of South Savo society.

Pellervo Kokkonen, the project manager for Savonlinna Development Services Ltd in RuralGrowth highlighted that, “besides the contribution of the project partners, it was also the strong ongoing interaction on local level among the members of the Local Stakeholder Group which made the emergence of those projects possible. Each partner was ready to take up the inspiration from our international partners and the international dimension of the projects imposed somehow a higher level of ambition in policy improvement. The high level of trust among the local players, including the Managing Authorities for the development funds, enabled to develop those projects and embed them in a shared strategy.”

Lessons learned – the way forward in Savonlinna

The experiences made with the actions initiated in the framework of the RuralGrowth project will definitely not remain unused:

  • Startup incubation activities as delivered in the ROIHU – Startup booster Savonlinna project are going on under the leadership of XAMK. Discussions have been initiated on the possibility to offer in the future a co-working space to local entrepreneurs.
  • The activities on service design for tourism and visitor economy sector in the PAMU Savonlinna project have led to follow-up projects dealing with service experience for tourists and capacity building measures, waiting for approval for funding. A major development consists in the launch of an online Do It Yourself package for service design. The Samiedu vocational institute has also incorporated service design into its education offer with SME entrepreneurs and SME employees as target group. Samiedu’s staff has been accordingly trained for service design.
  • The Digiportaat (Digisteps) project, considering its huge success among local SMEs, was first granted an extension and allocated additional co-financing. The current project demonstrated the huge demand for coaching and training in digital skills in the SMEs. It is expected to be continued based on the lessons learned in the next funding programme period. A new project is already being planned in coordination with the relevant Managing Authority; the anticipated budget will be € 1.400.000 for two years.

The lessons learnt in RuralGrowth helped the Finnish organisations to leverage the funding provided by their Regional Operational Programmes with high quality projects resulting from the cooperation within Interreg Europe. No doubt, visitors will be able to benefit from all those improvements on site soon.

Photo credit: tweny20photos on envato elements.