New Metrics
Consumers Crave 'Green' Travel Options, But Is There Economic Value Behind Sustainable Tourism?

You may not have noticed, but on December 13, 2012, the travel industry reached a critical milestone. It was on that date, according to the World Tourism Organization (UNWTO), that the one-billionth international tourist arrived at her destination ready to explore the local sites. Moreover, if current statistics from the Center for Responsible Travel (CREST) are accurate, with her choice of accommodations, activities, and restaurants, she endeavored to support the local community socially, economically and environmentally:

• 58 percent of Conde Nast Traveler readers said their hotel choice is influenced by the support the hotel gives to the local community;
• Ecotourism can return as much as 95 percent of revenues to the local economy, compared to only about 20 percent for “standard, all-inclusive package” tours, and
• The “most interesting sustainability issues” for travelers are: pollution (71 percent), biodiversity and animal protection (64 percent); climate change and carbon emissions (63 percent); fair trade and labor standards (62 percent); and social and community issues (61 percent).

While these statistics depict travelers’ desire for more responsible options during vacation, they do not speak to the bottom line economic value for travel destinations that choose to implement sustainability into their operations.

Other than the occasional anecdote that spotlights an individual hotel’s experience, there is no detailed and reliable benchmarking data behind “green is good for business” claims. However, a study taking place in Ireland aims to change that.

Calculating ROI for Sustainable Tourism in Ireland

By all accounts, Ireland has been moving toward sustainable tourism at a rapid pace. In the last decade, Ireland has developed sustainable tourism standards, a globally recognized eco-certification program, green travel marketing toolkits, and most recently, the Wild Atlantic Way touring route filled with agritourism food trails, naturalist-guided adventure activities and environmentally conscious boutique hotels.

Given the fear that the route will become so popular that it will unintentionally destroy the very natural resources that it was intended to spotlight, the Wild Atlantic Way has been met with cheers and jeers from tourism businesses and environmentalists alike, which raises the question:

How can Ireland ensure the future economic and social growth as well as sustainable development of its communities given the lack of relevant benchmarking data?

Recently, the National Tourism Development Authority of Ireland (Fáilte Ireland), the Burren Ecotourism Network (B.E.N), the Electric Escapes biking consortium, and sustainable travel consultancy Greenloons entered into a joint venture to determine the driving elements of sustainability that affect Return on Investment (ROI) in Ireland.

Previously, tourism companies had calculated ROI based on capital investments and savings, and incremental revenue realized from operational investments, such as renewable energy, water conservation, waste management, and food and beverage sourcing projects, among others. The consistent issue was that ROI, calculated under those parameters, was negative for the first two years. Yet, the flaw in the ROI model was that it was not holistic in its approach.

Specifically utilizing an environmental scorecard approach for measuring ROI, Greenloons built on the operational and environmental elements that are typically measured by tourism businesses and expanded it to include the costs for and benefits to employees, communities and customers.

For example, among other components, the customer criteria delineates investments such as the production of environmental and wildlife educational materials that would be distributed to clients, balanced against the savings brought about by media mentions due to a company’s sustainability status and the incremental revenue from customer referrals who were specifically seeking sustainable choices.

Essentially, it was the true strategic partnership potential of sustainability that was missing from existing ROI models. However, when these parameters are included and weighted appropriately, generally the ROI calculation is positive during the first year.

The Greenloons proprietary model further addresses how a sustainable tourism company can plan, budget, and market the social, economic, and environmental changes and improvements sustainability will bring to their business.

Study Will Share Critical Success Factors for Sustainable Tourism in Ireland

In the coming months, Greenloons will share its findings with Sustainable Brands readers after analyzing the ROI Model results for general trends and identifying the driving elements or levers of sustainability for tourism in Ireland.