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Criteria That Positively Affect the ROI of Sustainable Tourism

Image credit: HillWalk Tours

Ireland has made positive strides in sustainable tourism in the last decade, including the development of a globally recognized tourism eco-certification program and the Wild Atlantic Way touring route filled with agritourism food trails, naturalist-guided adventure activities and environmentally conscious boutique hotels.

While Fáilte Ireland (Ireland’s National Tourism Development Authority) has provided some information to tourism businesses about the criteria and importance of sustainable tourism, one question remained unanswered: What is the economic value for Irish tourism businesses and communities that want to attract more conscious tourists?

Given the lack of benchmarking data behind ‘green is good for business’ claims, Fáilte Ireland commissioned a pilot study that would compile actionable information about the Operational, Community, Customer, and Employee ROI elements of sustainable tourism.

Based on Greenloons’ proprietary Return on Investment (ROI) for Sustainable Tourism model, participants were asked to provide quantitative and qualitative data about their tourism business.  After consolidating and analyzing the results, the data revealed that:

  • There was a higher ROI for accommodations (i.e. green hotels, hostels, lodges) versus guiding (i.e. day trips) companies that implemented sustainability into their businesses,
  • While Operational ROI remains negative for at least five years (aggregated for the study’s participants), the investments made by these tourism businesses toward local communities, employees and customers make up for difference, and
  • For both accommodations and guiding companies, the triple bottom line ROI driver was providing clear and direct information to customers about sustainability.

Sustainable Tourism Accommodations & Guiding Companies Deliver Positive ROI in Year 1

Based on the sustainable investments undertaken by the participants in the study, Operations ROI remains negative for at least five years. However, additional investments made by these Irish tourism businesses toward local communities, employees and customers make up for difference netting to a positive ROI of 1557:1 in Year 1.

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Levers that Influence ROI Include Tax Incentives & Community Engagement

The analysis showed that Operations ROI for sustainable accommodations was most affected by government tax incentives or rebates offered to these businesses to invest specifically in renewable energy and waste management systems.

In addition, where applicable, companies benefited from the additional marketing capacity of their sustainable network (or eco-certification provider). For guiding companies however, Operations ROI was most affected by targeted online and offline marketing materials that emphasized sustainability.

For both accommodations and guiding companies, Community ROI was most affected by the development of community engagement and internship programs as they served a dual

purpose of educating the community about the tourism business’ ethos for sustainability and marketing to the region about the business’ unique product offering(s).

Furthermore, Employee ROI was most affected by increased productivity as a  result of lower turnover and an employee’s ability to take on some additional tasks (i.e. multitasking due to experience level). A notable, though lesser, effect was realized due to safer work environments.

Finally, Customer ROI was most affected by the revenue from customer referrals and repeat customers due to the higher customer satisfaction rates (and ostensibly increased awareness) by the customer about the sustainable aspects of their stay.

Next Steps for Increasing ROI for Sustainable Tourism

For both sustainable accommodations and guiding companies, the triple bottom line driver was providing clear and direct information about what makes the individual tourism company sustainable and how it contributes to the overall customer’s better experience.

Hence, regions and nations that define a clear sustainable tourism strategy along with specific goals and measurements for the visitor experience, the environment and the participating communities win on the communications front.

After all, if it’s easy for customers to understand, it will be easy for travelers to engage and share why sustainability is important.