UNWTO partners with the International Hotel and Restaurant Association

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This week, the United Nations World Tourism Organisation (UNWTO) and the International Hotel and Restaurant Association (IH&RA) have consolidated their partnership in a Memorandum of Understanding (MOU) in matters related to sustainable hospitality. The MOU was signed on the 10th of March  (which coincided with the 1st World Hospitality Day) at Interlaken, Switzerland.

IH&RA (a UNWTO Affiliate Member) has long been a strategic partner to UNWTO. This MOU will allow both organisations to cooperate even closer towards their common goal of driving positive changes in  a number of initiatives related to the hospitality industry; including the Nearly Zero-Energy Hotels (NEZEH) Project, supporting hotels in improving their energy efficiency and reaching nearly zero energy levels.

This partnership agreement may serve as a catalyst for further cooperation agreements between private and public sectors for the best interest of all stakeholders in the hospitality industry.

Source: http://media.unwto.org/press-release/2014-03-12/unwto-and-ihra-sign-memorandum-understanding

Links:

NEZEH European Project, Nearly Zero Energy Hotel

European Commission > Energy > Intelligent Energy Europe > “Nearly Zero-Energy Hotels” (NEZEH)

Centre for Energy Efficiency in Sweden: Nearly zero energy hotels – IEE funded project

Tsoutsos, Theocharis, et al. (2013) “Nearly Zero Energy Buildings Application in Mediterranean hotels.” Energy Procedia 42: 230-238.

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How Education brings Social Cohesion and Economic Growth?

Who would argue against lifting people out of poverty? Today, education transcends curriculum programmes. It provides opportunities for social mobility as individuals are rewarded according to their merit.Interventions in the realms of education may play a significant role in shaping key performance indicators for social outcomes. This short contribution suggests that education may create a fair, just and equitable society for all. Thus, the notion of social cohesion and its constituent elements; social inclusion, social capital and social mobility are some of the concepts which are increasingly being addressed by stakeholders in education.

With better education there may be implications for economic growth, job creation and competitiveness (OECD, 2009). The Ministry of Education and Employment together with the University of Malta and other vocational institutions have always strived in their endeavours to address skill gaps (and mismatches) in the labour market. A lot of discourse has been made about how Malta’s productivity and competitiveness may be improved through active labour market policies and initiatives. For instance, more participation of women in the job market, flexible working arrangements, the provision and affordability of child-care facilities as well as out-of-school centres may possibly help to bring more social cohesion and a better living for all members of society. In addition, lifelong learning and employment opportunities are also vital elements of any social cohesion agenda. Through education and training, individuals will acquire knowledge and cultivate skills and competences which are relevant to their employers. Consequently, educational outcomes will influence social inclusion, social mobility and social capital as illustrated hereunder in Figure 1.

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Figure 1: The Components of Social Cohesion (OECD, 2011)

The schooling experience itself impacts social cohesion as it shapes and transmits common values that underpin social capital and inclusion. Education has the potential to bring social cohesion through civic and societal engagement. To my mind, how children are schooled may impact on their sense of belonging to a society. It is important to realise that certain instruments that reduce opportunity costs of continued education can possibly improve student attainment levels. Young adolescents who leave education and training prematurely will lack the necessary skills and qualifications which are essential for their employment prospects. It may appear that, Malta is responding to the contentious issue of early school leaving (ESL) through the provision of ongoing training schemes as well as employer incentives. The Employment and Training Corporation is also using the European Union’s Training Aid Framework (TAF) which is co-funded through the European Social Fund to strengthen the employability prospects of the Maltese work force. In a nutshell, this programme sponsors students, employees and unemployed individuals to train themselves in areas which are required by the labour market. The Ministry of Education and Employment has always been committed to increase the number of students in higher education. Interestingly, Malta’s National Reform Programme under the Europe 2020 Strategy has yielded some preventative measures against ESL, including; the implementation of the “National Curriculum Framework”; the provision of more opportunities for vocational education and training (VET) in compulsory education; the strengthening of the existent “Validation of Informal” and “Non-formal Learning” as well as the development of new forms of teaching and learning, such as “e-Learning”. This programme posits that intervention measures include; a review of extant measures with a focus on school, parent, teacher collaboration, the development of a multi-stakeholder approach to address the needs of particular groups of students at risk of ESL and the further strengthening of guidance throughout compulsory education. As a result, this reform programme has set clear and measurable targets in this regard, as it emphasised the importance of effective delivery and visible results. Apparently, stakeholders in education are committed to taking steps to improve the provision of training, skills and qualifications. Year after year, the smallest EU state is raising the quality of its education and training systems to encourage a greater participation of its workforce in the labour market.

Malta has recognised the importance of reducing its number of unqualified school leavers. Lifelong learning, ongoing training opportunities and continuous professional development can offer valuable support to more vulnerable people. Measures including; better access to childcare, more flexible working schemes and employer incentives are surely helping individuals, particularly women to return to work. This short contribution suggests that the pursuit towards continuous improvement in educational scale and social progress can create a virtuous cycle of productivity outcomes and economic growth.

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Davos 2014 calls for corporate responsibility

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Davos 2014 calls for Corporate Sustainability and Responsibility: #CSR brings benefits to both business and society! #SharedValue

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Google’s Advantage in Native Advertising

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There are many internet users who may be wary of their privacy settings and on the information they share online. One of the reasons is that it is very likely that ICT giants like Google and Facebook may know their users very well. Google, in particular might know where its users are, the places they go to, the location of their home address and where’s their place of work, who are its users’ closest friends, the things they like, the websites they browse and in many cases, even the content of their emails.

Provided that individuals don’t mind giving up a chunk of personal data, their life can be made a bit easier by the web’s services. The internet’s mantra is to make information more useful, accessible and readily available to everyone. Nowadays, we use our tablets or smart phones and visit dozens of websites to learn about products and services. Savvy consumers like to compare prices whether they are buying items online or in retail stores. The latest technological developments and additional sources of information are influencing consumer behaviour as it appears that they are becoming more frugal in their purchase decisions. Consumers are seeking better value and good deals in return for their money.

Google is increasingly exposing its search functionality to its users. Last year, it tested a ‘Knowledge Graph’ pop-up which featured a carousel of images along with certain search results on hotel accommodation. As with restaurants and bars, review scores and recommendations are usually generated by consumers themselves rather than through conventional search engine optimisation tricks. It seems that Google’s drive is to personalise the search experience through ‘meta-search’ tools which aim to recognise what exactly users are looking for. In this day and age, it is very important to understand the broader context of consumers’ search queries. For instance, internet users may start searching for flights. Afterwards they might browse for hotels, then restaurants as well as cultural activities. Evidently, Google is responding to such queries by bringing up pictures of neighbourhoods, reviews as and also Trip Advisor content.

Recently, Google has been looking for the meaning beyond its users’ search content. Before September 2013, Google’s searches were focused on site content which improved its results by penalising low-quality material. However, the search engine’s latest algorithm, Google Hummingbird is focusing more on the search query itself. Hummingbird has implemented something called “conversational search” in order to better understand what users want when they either type or speak a search query into Google’s search engine. For example; the query, “Where can I buy a smart phone, near me?” Pre-Hummingbird Google would have prioritised search results that match individual words – like “buy” and “smart phone.” With Hummingbird, Google can better understand what users want from their query. Most probably, Google may know your exact location and hopefully it can find smart phones near you. It may be in a better position to determine whether you want a brick-and-mortar store rather than an online retailer. In a nutshell, Hummingbird is focusing on the meaning of the entire search query rather than simply searching for key terms. Hummingbird allows Google to provide its users with more accurate results and better site rankings.

Notwithstanding, Google often utilises its users’ data to re-target advertising to them. Google collates its users’ profiles with their data. Personal information is being used by Google for business purposes. Google Adwordsdisplays the marketers’ messages in front of potential customers; right when they’re using its search engine, watching a video on YouTube or when they are receiving their email through Gmail. As a result, online marketing ads appear on google users’ screens. These ads capture the users’ attention by providing certain content which may possibly appeal to them as potential customers. Such online advertising is called ‘native advertising’. Professional marketers are capable of producing relevant content which can entice customers’ to purchase their products or services. The right content is personalised in both its form and function according to individual customers’ needs and wants. This way, paid advertising may feel less intrusive and there’s a better chance that internet users will click on these web ads. The most popular formats for native advertising usually feature promoted articles, images, videos, music as well as other media.

In the past few years tech giants, particularly Google strived in their endeavours to gather valuable information about their users’ interests, the things they look for, their friends, the places they like and what have you! Google maintains that it can better serve its users if they voluntarily disclose their data on the web.

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A Recent Portrait of Asian Travellers

Travelzoo Asia Pacific has released its annual subscriber survey findings that show that this year they are forecasting an increase of 17 percent in travel budgets over 2013. The results also indicate certain changes in vacation spending patterns of the Chinese travellers. It transpires that the majority of them are willing to spend more to upgrade their holiday experiences as they are opting for high-end accommodations.

shaThe Pearl landmark in Shanghai.

This survey mapped changes in consumer behavioural attitudes and it also provides a benchmark for the travel industry across the Asia Pacific region. A study was conducted among 3,400 Travelzoo subscribers between November 24 to December 15, 2013. The informants hailed from Australia, China, Hong Kong, Japan and Taiwan.

This quantitative study suggested that the Chinese travellers will continue to lead the region with regards to travel frequency. On average the mainland Chinese subscribers are expected to travel about 6.5 leisure trips and will spend around USD $8,200 each during 2014. These figures are followed by the Japanese segment, with 5 leisure trips and an average expenditure of USD $4,800. The Taiwanese with 4.4 leisure trips and an average expenditure of USD $6,170; and Hong Kong travellers with 4.3 leisure trips and an average spend of USD$6,900. Curiously, Australians will travel the least, with an average of 3.5 leisure trips in 2014. However, this study suggests that they will fork out the most. The Ozzies will be spending over USD $9,340 for their vacations this year.

When respondents were asked to describe their attitude towards leisure travel, 62 percent of the informants indicated that they would prefer to explore the destinations at their own pace. Fifty four percent declared that they want to rest and relax during their vacations. Almost half of the informants would like to improve on the quality of their vacation package. The informants revealed that they will spend more on hotels, food and entertainment, and less on shopping. The Chinese subscribers are willing to spend an average of USD $169 per night. This finding is in line with their willingness to spend even more for a better holiday experience.

Group Tours: Interestingly, the Group tours’ appeal continued to decline among all subscribers, with a regional average of 30 percent who will choose to travel in groups. Evidently, the Chinese like to personalise their own travel experiences as only 14 percent go for group tours, and 58 percent purchase accommodation and transportation individually.

All-Inclusive Holidays: Over 51 percent prefer all-inclusive holiday packages and purchasing accommodation and transportation only. Fifty four percent of the Chinese subscribers prefer all-inclusive holiday packages

Mobile Internet: Over 80 percent of Travelzoo Asia Pacific subscribers will be using mobile internet during their holidays. An overwhelming 98 percent of the Chinese subscribers maintained that they will do so, followed by 93 percent Hong Kong subscribers. Eighty four percent of Asian travellers held that the first thing they would do when they reach a café / restaurant or a hotel is to check for the availability of free Wi-Fi.

This study confirms that tourism in the Asia Pacific region is yet another important engine for economic growth. It shows that outbound tourism in Asia is poised to grow further in the coming years. Travel Zoo’s study has also noted some of the emerging trends in the tourism sector. As a result the travel and hospitality businesses will have to respond to their customers’ expectations by offering higher levels of personalised service as well as better quality vacation products. Those tourism practitioners are required to satisfy their customers’ needs and wants, if they want to remain competitive.

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Consumer Behavioural Attitudes: Implications for eTourism

online

Last month, the University of Central Florida’s Rosen College of Hospitality Management in collaboration with Elsevier organised the 2nd World Research Summit for Tourism and Hospitality in Orlando. During this inspiring event, one of the keynote speeches featured some interesting findings from a national US survey entitled; ‘The Portrait of American Travellers’. This quantitative study consisted of 2,511 informants (who reportedly were active leisure travellers in 2013); who reside in households with an annual income of $50,000 or more (they also included “affluent travellers” with an annual income over $125,000); who have taken at least one leisure trip of 75 miles or more from home during the previous 12 months (who have used overnight accommodations).

The survey, which was conducted during February 2013, has provided an in-depth examination of the impact of the current economic environment, prevailing social values, and emerging media habits on the travel behaviour of Americans. Unlike most surveys in the travel category this particular study explained how consumers plan, purchase and share information about their travel experiences. It also revealed some of the underlying motivations that often influence travel decisions. Respondents were selected randomly and screened before they voluntarily participated in a 45-minute online survey. The study indicated that all tests of statistical significance were made at the 95 percent level of confidence.

In a nutshell, this American study has shown that the latest advances in technological developments and additional sources of information are increasingly influencing the tourists’ choice of tourism destinations. Apparently, travellers are becoming more frugal in their purchase decisions. They are often making smarter options, seeking better value and good deals in return for their money. Travel shopping sites such as Kayak and Dealbase have gained in popularity and are now used to make travel reservations by 28 percent of travellers. Interestingly, this figure rose from a mere 15 percent in 2010. Meanwhile, six in 10 leisure travellers (58 percent) typically use an online travel agency (OTA) such as Expedia, Travelocity or Orbitz to research travel. Yet, at the same time the use of OTAs to make travel reservations is down from 66 percent in 2010 to 58 percent in 2013.

Evidently, the tourism and hospitality enterprises have become cautious in pricing their products (and services) and they often resort to revenue management tactics. This study suggests that travellers are planning to spend slightly more on travel / vacations as 82 percent of the informants have indicated that they are planning to take as many (or even more) trips in 2014 when compared to last year.

Some of the most significant results of this study include:

  • Low Cost versus Legacy Carriers: Since the cost of travel remains a major issue in influencing leisure travel preferences, it follows that half of all leisure travellers (47%) prefer travelling on a low-cost carrier. Only three in ten (30%) prefer to fly on a full-service carrier. However, one-quarter (23%) have no preference. And it should be noted that leisure travellers are significantly more likely to prefer a low-cost carrier today than in previous years – in 2010 only 42% favoured such carriers.
  • Digital Marketing: More than eight in ten leisure travellers use the internet to either obtain travel information (87%) or make travel reservations (83%). 54 percent have downloaded airline branded apps, followed by hotel branded apps (38 percent), and destination guides (27 percent).
  • E-Commerce: More leisure travellers now access the internet via a smartphone (62%) than from the office (59%). Four in ten (43%) also now access the internet from a tablet. Access to the internet via tablets jumped from 7% of all leisure travellers in 2011 to 43% in 2013.
  • Mobile E-Commerce: Smartphone usage among travellers has nearly tripled since 2010, and the act of downloading travel-related applications has also increased dramatically – from 19 percent in 2010 to 36 percent in 2013. Among travellers who have downloaded travel related apps,
  • Social Media: Only 17% of leisure travellers with household incomes over $250,000 have confidence in the information read or seen on a social media site about potential travel destinations. This is significantly lower than the percentage of those with lower household incomes; 25% of leisure travellers with household incomes of $50,000–$124,999 and 21% with household incomes of $125,000–$249,999 have confidence in social media when considering vacation destinations.
  • Word of Mouth. Eight out of ten travellers (82 percent) expressed confidence in the recommendations of friends and family members when considering vacation destinations, while six in ten (58 percent) turned to online advisory sites such as Yelp or TripAdvisor.com. Approximately four in ten travellers (41 percent) are confident in consumer reviews read on a blog, while slightly less (39 percent) are confident in articles found in newspapers, magazines, TV and radio.
  • Going Green for Green. Though eight out of 10 leisure travellers (79 percent) describe themselves as environmentally conscious, just 10 percent are willing to pay higher rates/fares for environmentally-friendly travel services, and only one in 10 (11 percent) has selected an environmentally-friendly travel service supplier who demonstrates environmental responsibility. Four in 10 (44 percent) indicated that they would probably choose an environmentally-friendly travel supplier who expresses concern about the environment over one who does not.
  • Consumer Outlook: Three-fourths of leisure travellers (73%) are optimistic about their own future and the future of their children (73%), while six in ten are optimistic about the future of their job (62%) or company (61%).

For more information about these latest travel and tourism industry insights are also available on MMG Worldwide.

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Key trends in Tourism for 2014

itb

The annual ITB World Travel Trends Report has indicated that Asia is among the major forces driving the international tourism market. According to IPK International, many Asian countries have experienced impressive growth in travel and tourism. In a nutshell, their findings indicate that the Chinese are becoming frequent travellers as their affluent Japanese neighbours are spending considerably less in tourism and hospitality products. Apparently, the Chinese market is now the world’s number one when it comes to travel expenditure. This report also suggests that Chinese tourists rank second for travelling abroad and are fourth for overnight stays.

In 2012 the Chinese citizens have made around 45 million trips abroad and spent approximately 84.4 billion dollars. Overall, international departures from Asia have increased by eight per cent during the first eight months of 2013. It is the Chinese market which has actually contributed towards this trend. There was an astonishing 26 per cent increase in Chinese travelling internationally over the previous year. On the other hand, the Japanese have travelled less (i.e. -2 per cent). For 2014, the Chinese people are expected to travel even more than this year, as departures are forecasted to increase by around 18 per cent.

In a similar vein, this year’s arrivals in Asia were very encouraging. According to the World Tourism Organization (UNWTO), between January and August, international arrivals grew by 6.3 per cent when compared to 2012. There was an increased demand for Southeast Asia and Southern Asia as tourism arrivals grew by 12 per cent and 6 per cent, respectively. There was a growth rate of 4 per cent in the Pacific region. Arrivals in northeast Asia rose by three per cent.

The Chinese market was the most eager to travel among other Asian countries. Their holiday stay (which exceeded four nights) have risen by 28 per cent, whereas short trips / weekend breaks have increased by around 21 per cent. This sharp surge in tourism figures shows that the Chinese have emerged as the world biggest spenders, averaging around USD 1,765 per trip. Apparently, their main reason for travelling abroad is for holiday / vacation purposes. Such trips rose by 30 per cent this year. City breaks and beach holidays also became very popular for this market segment. At six per cent, the business travel market (which also comprises MICE) grew moderately on the previous year.


Typically, the Chinese travelled mainly within Asia, while long-haul trips to Europe and America followed in the second place. Interestingly, this travel boom is set to continue as experts are predicting that the Chinese will be just as eager to travel during 2014. Around 44 per cent of the respondents from China declared that they intended to travel more next year. Although, only seven per cent of Chinese citizens earn more than 15,000 dollars a year, the country’s competitiveness and economic growth prospects are bringing a demographic shift that is characterised by a fast-growing, wealthy middle class. This is in stark contrast to other Asian nations such as Japan, South Korea and Taiwan. For instance, international trips in Japan fell by an overall two per cent, while overnights and spending dropped by three and six per cent, respectively. To add insult to injury, the business travel market has suffered even worse than holiday trips in Japanese destinations. Generally, there was a downward spiral in demand for long-haul destinations. In 2012, long trips have dropped by around 20 per cent in the Asian continent. This was largely offset by an increase in city breaks and beach holidays. Very few of the respondents from Japan said they wanted to travel more than this year despite Japan’s economy is on the road to recovery. It is likely that the Japanese market will probably stagnate in 2014.


By and large, tourism forecasts are indicating a growing eagerness for travel and tourism over the next few years. This is mainly attributed to the Chinese economic growth and its expanding middle class, that is both educated and young. Moreover, the emerging low cost carriers in the region are making travelling much easier and affordable.

More information is available here: http://www.ipkinternational.com/en/read-news/article/34/?cHash=28b716052bd119810a0926c5bd416005

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UNWTO Partners UNESCO to Promote Sustainable Tourism

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The United Nations World Tourism Organisation (UNWTO) and the United Nations Educational Scientific and Cultural Organization (UNESCO) have forged a new cooperation agreement.  A Memorandum of Understanding  consolidates the two intergovernmental organizations’ efforts on sustainable tourism, as they  will work together on national, regional and global initiatives to safeguard natural and cultural heritage. This agreement covers the following issues:

– The implementation of the UNESCO World Heritage and Sustainable Tourism Programme

– The development of transnational tourism initiatives to promote and protect the shared heritage of the Silk Roads Heritage Corridors

– The identification, development and networking of sustainable tourism initiatives and activities in biosphere reserves

– The promotion of sustainable tourism through United Nations partnerships and initiatives, such as the United Nations

Steering Committee on Tourism for Development (SCTD) and the Global Partnership for Sustainable Tourism (GPST).

UNWTO has already been working closely with UNESCO for many years to ensure a sustainable approach to heritage management and tourism. Tourism plays a significant role in the preservation, conservation and promotion of cultural and natural assets. This agreement further strengthens both organizations’ capacity to integrate sustainable tourism principles with the protection of the world´s heritage. This MoU is the third agreement between UNESCO and UNWTO since 1979.

Source: http://www2.unwto.org/en/press-release/2013-11-28/unwto-and-unesco-join-hands-sustainable-tourism-promotion

Related Link: UNESCO/UNWTO Silk Roads Heritage Corridors Workshop set visa facilitation as top priority:

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Digital Marketing: Ten things you need to know!

dm

Businesses always need to find new ways how to leverage themselves through innovative marketing applications. They often make use of multichannel communications to reach their target audiences. Digital marketing can help to raise awareness of business. It comprises distinct sets of tools including blogs, wikis, email marketing, social-networking sites and search engine optimisation among other channels. Nowadays, entrepreneurs can build stronger ties with their networks through the following tactics:

  1. Mobile Friendly Web Pages: Corporate sites have to be compatible with different browsers on mobile devices including smart phones and tablets.
  2. Easy Navigation: Navigation in the corporate sites should be as easy as possible, with user-centred design. Corporate businesses’ sites may possibly enable interactive information sharing, inter-operability and collaboration across Twitter, Facebook, LinkedIn Google +, Digg, Reddit, Pocket, StumbleUpon, Pinterest, Tumblr, Paper.li and ScoopIt among others.
  3. Testimonials, Blogs and Forums: Rotating testimonials are used to pull customers by providing views of satisfied customers. Marketers can create a forum where clients or web visitors can ask questions, get tech support, or post comments. Consumers themselves are quickly becoming ambassadors for businesses’ products and services. For instance, Trip Advisor and Yelp offer trusted advice, opinions and reviews from real customers. Very often, customers are posting their pictures and experiences associated with products and brands on Instagram and Pinterest.
  4. Pay per Click Advertising: Online marketing is usually carried out through Google AdWords, Bing Ads, and Facebook.
  5. SEO: The purpose of search engine optimization is to enhance the visibility of web sites in search engine results. Through effective SEO, relevant keywords will direct more traffic to web sites. Nowadays there are many firms offering professional SEO software. In addition to marketing analytics software, customers will usually access SEO and inbound marketing resources.
  6. Google Maps/Places: Google has changed the search landscape with the introduction of GoogleMaps. When web users search for places, Google locates all the businesses on its map.
  7. Social Media Marketing: Social media accounts are also open for business. Some of the latest networks allow their prospective users to login to their site from Facebookor Twitter.
  8. Video: Businesses can showcase their products or services through Youtube, Dailymotion, Vimeo and Vine. Marketeers are increasingly uploading short, fun videos which often turn viral.
  9. Email Marketing: Emails are forwarded to lists of customers and prospects which are based on their past purchases. Emails and e-newsletters are an effective way to retain existing customers. Many customers like to be informed of the latest products and offers.
  10. Hashtags: Customers’ are often invited or rather pushed to share facebook statuses / tweets about business offers and deals as a requirement to take part in competitions. Businesses and customers alike have also learned how to use the hashtag (#) to enhance the visibility of their posting.

This contribution provides some good advice on contemporary digital marketing. The most successful business practitioners are those who are capable of forging direct relationships with their customers. Consumers ought to be involved in marketing and selling activities; from product development to after-sales feedback. In this day and age, it is imperative that companies value their consumers’ opinions and preferences on various aspects of the marketing mix.

Dr Mark Camilleri is an academic, independent writer, speaker and a business strategist. He specialises in marketing communications, evaluation, and research – http://goo.gl/4jYlBl

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‘Crowdfunding’ for economic growth and competitiveness

crowdfunding

 

Recently the European Commission has launched a consultation programme (between the 3rd October to 31st December 2013) to explore the costs and benefits of ‘crowdfunding’ as an alternative form of finance. Contributions are sought from competent authorities, crowdfunding platforms, entrepreneurs and individuals who launched crowdfunding campaigns. Stakeholders are invited to share their views about crowdfunding opportunities and to help in the design of an optimal policy framework which will untap the potential of this new form of financing. Crowdfunding entails the collection of funds through small contributions from many parties in order to raise capital for a particular project or venture. This alternative source of financing has the potential to bridge the equity gap many start-ups face. It is hoped that this initiative stimulates entrepreneurship amid different regulatory, supervisory, fiscal and social structures of the European Union. Evidently, the European Commission is delving through extant national legal frameworks to understand better how businesses can raise their capital through such open forms of financing. Whereas some crowdfunding campaigns are local in nature, there may be others who are benefiting from easier access to financing within the single European market.

Certain safeguards may be necessary to maintain the stakeholders’ trust and engagement. The ultimate objective of the European Commission’s consultation is to gather data about the needs of market participants and to identify the areas where there is an opportunity for the sustainable growth of enterprises though debt-based or equity-based crowdfunding. The consultation covers all forms of crowdfunding; ranging from donations and rewards to financial investments. Everyone is invited to share their opinions and perceptions, including citizens who might contribute to crowdfunding campaigns and entrepreneurs who may launch such campaigns. National authorities and crowdfunding platforms are also encouraged to reply.

In a similar vein, the United States’ Securities and Exchange Commission (SEC) is currently considering crowdfunding as it was featured in “Jumpstart Our Business Startups Act” (JOBS Act). It is very likely that the proposal for crowdfunding will bring a major shift in how small U.S. companies can raise their money in the private securities market. Alternative sources of finance which are already secured via the internet include; monetary contributions in exchange for rewards, product pre-ordering, lending and / or investment. With crowdfunding now there’s the possibility that smaller businesses will be able to raise up to $1 million a year by tapping unaccredited investors. Any type of project with a promising ROI may soon opt for crowdfunding. Hopefully, it will be the micro entrepreneurs and researchers who will be capable of soliciting such ‘crowdfunding’ opportunities.

These plans can be successful only if the regulatory costs are kept as low as possible. Otherwise, small enterprises may not be intrigued by such a financing proposition. From the outset, crowdfunding may still seem a bit unclear at this stage. There are many companies including startups that can take advantage of these rules. Probably, one of the main causes of concern will be any reporting requirements for small companies to file their annual financial statements. For instance, SEC’s crowdfunding proposals may suggest certain disclosures, such as; “information about officers and directors, how proceeds from the offering will be used, and financial statements”. It transpires that the crowdfunding proposals are limiting how much money an unaccredited investor can contribute each year. The proposal says that investors with a net worth and income of less than $100,000 can contribute only $2,000 or 5 percent of their net worth or income, whichever is greater. Those with a net worth or income of more than $100,000 can contribute more. In an effort to reduce burdens on companies and portals, SEC’s plan would not explicitly force them to take steps to verify income levels and the net worth of investors in crowdfunding. At the same time, SEC would require companies using crowdfunding to release financial statements and other information that could prove costly.

No doubt that the most experienced entrepreneurs and their intermediaries will have no difficulty in meeting such crowdfunding rules and regulations. Perhaps, it is the first-time entrepreneurs who may require further support. At present the smaller businesses earning revenues (and profits) below a certain threshold are not legally obliged to provide audited financial statements. Moreover, small enterprises may not always have historical financials. This means that financial services authorities will find it quite difficult to determine how small companies are true and fair in their financial reports. According to the US proposals, the businesses who consider crowdfunding as a source of finance will have to audit their accounts.

By the end of this year the European stakeholders would have consulted about this ‘new’ source of finance. It is hoped that any discourse in this regard will translate into facilitative, soft-law measures leading to legislative action. If the crowdfunding proposals will be implemented; more capital will be unlocked for start-ups, investments and projects. This capital finance will surely help to spur economic growth and competitiveness.

More information is available here:

http://ec.europa.eu/internal_market/finances/crowdfunding/

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