First, to understand the value of why a business (not only a tourism business) would want to calculate ROI sustainable tourism, view the short video below:
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 an important 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?
Project Partners & Approach
In November 2014, the National Tourism Development Authority of Ireland (Fáilte Ireland), the Electric Escapes Ireland biking consortium, and 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.
Greenloons Proprietary ROI Model Objectives
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.
We analyzed the ROI Model results for general trends and identified the driving elements or levers of sustainability for tourism in Ireland and presented the findings at the Ecotourism & Sustainable Tourism Conference in Quito, Ecuador in April 2015.