Assessing innovation readiness in European tourism and hospitality firms: Evidence from the European company survey

Tourism and hospitality (T&H) firms in Europe face mounting pressure to innovate amid rapid digitalization, globalization, and competition. This study examines the relative innovativeness of T&H firms compared to other sectors, using harmonized data from the 2019 European Company Survey (ECS) covering all EU countries. Innovation is assessed across three dimensions (product, process, and marketing) and by degree of novelty, distinguishing radical (new-to-market) from new-to-firm innovations, while also capturing underlying innovation readiness. Results show that, compared to other sectors, T&H firms are less likely to introduce market-new innovations, but display a strong propensity for incremental and adaptive innovation. Innovation outcomes are primarily shaped by enabling capabilities rather than structural firm characteristics, with ICT adoption, female leadership, strategies focused on quality and location emerging as key drivers. Findings also reveal intra-sectoral heterogeneity, highlighting the need for differentiated policies tailored to T&H subsectors. This study provides the first cross-sectoral, cross-national assessment of innovation in European T&H SMEs, helping close an empirical gap and foster innovation and competitiveness in the tourism economy.