Since the beginning of the 1990s, the Austrian tourism industry suffered a series of setbacks, which were caused partly by special factors like German reunification, currency depreciations or the slump in air fares, and partly by substantial structural weaknesses. Many indications suggest that it will take serious efforts and a thorough reexamination of traditional strategies from the tourism sector, if it wants to maintain a still comparatively high share of GDP. For the whole of 1996, nominal tourist revenues are likely to shrink further. While revenues for the past winter season broadly matched those a year ago, losses will concentrate on the summer period: earnings are expected to fall by a price-adjusted 5 percent year-on-year over the six months from May to October. Many other European destinations are affected in a similar way by a slackening of demand from European customers. Apart from structural deficiencies like • a low share of air-travel passengers, • a lack of contemporary attractions, • a lag in the implementation of electronic information and reservation systems in order to handle demand, • a lag in adaptation and modernization of supply facilities, • preponderance of sluggish and saturated markets, the weakening of business activity in the industrialized countries (partly induced by fiscal restriction), combined with a relatively high price level (in a common currency) and low air fares may prevent a rebound in Austrian tourism before 1998. Urgent action is needed if Austria is to maintain its international competitiveness as a tourist destination, with the only small potential for productivity advances in the sector and the high prices of services in a mature economy imposing serious constraints. The fundamental and rapid changes in international competitive conditions as well as the globalization of markets call for reexamination of conventional strategies. A possible set of tourism and general economic policy measures designed to keep the GDP share of the tourism sector above the international average may include • the formation of tourism-related human capital, • the orientation of marketing towards expansion and higher value added, • closer cooperation between suppliers of services and the implementation of destination management, • the creation of new competitive advantages through supply-related innovation, • the boosting of the quality of services, • the stepping-up of innovation and software promotion, • greater supply-side flexibility (opening and working hours etc.).