sustainable tourism and the emergence on new environmental norms

Sustainable Tourism and the Emergence of new Environmental Norms

Malgorzata OGONOWSKA & Dominique [email protected]

[email protected] Université de Nice – Sophia Antipolis, France

GREDEG - CNRS

mailto:[email protected]

mailto:[email protected]

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Problem Definition

Local population

Environment

TOURISMincludes

widerange of

economic activities

20-21/09/2012 Nice 2nd International Conference on Tourism Management and Tourism Related Issues

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Problem Definition

Since 1990s: consumers’ awareness of pollution and environmental protection

Modification of tourists’ preferences

Sustainable Tourism: “Every tourism activity that preserves for a long time the

local natural, cultural and social resources, contributing to the well-being of individuals living in those tourist areas”

(Associazione Italiana Turismo Responsabile)


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Related Literature (1/2)• Literature on sustainable tourism:

– Public policies assuring relationship between the local community and the tourists

• Accinelli, Brida & Carrera [2008], Caserta & Russo [2002]

– Public policies enhancing the actors to implement ecologically responsible measures and amenities

• Rivera [2002], Shen & Zheng [2010], Weaver [2005]

– Ecological education of market actors and population• Nita & Agheorghiesei [2010]

– Demand influence on investment and modernisation of amenities• Accinelli, Brida, Carrera & Pereyra [2007], Brau [2008], Claude & Zaccour [2009],

Minciu, Popescu, Padurean, Hornoiu & Baltaretu [2010]

– Price discrimination in natural reserves ticket pricing• Becker [2009], Walpole, Goodwin, Kari [2001]


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Related Literature (2/2)

• Price discrimination strategies in tourism• Clemons, Hann & Hitt [2002], Gallego & van Ryzin [1994], Stokey[1979]

• Tourism products distribution strategies• Fay [2008a], Fay [2008b], Feng & Xiao [2000], Fleishmann, Hall & Pyke [2004],

Fleishmann, Hall & Pyke [2004], Shapiro & Shi [2008], Zhao & Zheng [2000]


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ISSUE

Given the modification of demand preferences, how the service provider adapts its offer and reacts to

the possibility of a competitor’s entry?

What role do the service provider and industry play in the emergence of environmental norms?

Method: optimisation model with heterogeneous agents


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General Settings – 5 stages:1. No information on existing pollution

– traditional product only

2. Public information (i) on environmental damages is made available – new segment of demand appears (m) – agents sensible to environmental issues and

interested in sustainable tourism products– 2 types of product on 2 different markets

3. Agents integrate this information and environmental issues in their decisions– m grows– new brand emerge for sustainable tourism products

4. Environmental norms become general norms– quality of sustainable tourism products improve– all agents consume the products

5. Possibility of competitor’s entry on the traditional market– 3 incumbent’s reactions possible– The industry’s role in emergence of environmental norms


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No information on existing pollution

1. n agents interested in traditional products according to their net utility function:

Firm’s profits:

T Tu P

* ( )T Tn P n


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Demand differentiation2. Information i on existing pollution appears and the new

segment of demand m (agents sensible to environmental issues) – – initially very small– Their utility decreases as traditional products generate pollution: , with

– Service provider adapts the traditional product’s price:

– Service provider’s profits:

00 m n

GT Tu p

2Tp

2 ( )T n *

2T T


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Product differentiation

– Service Provider adapts to the new segment of demand & offers a sustainable tourism product:

o assumption: (rather low quality – ex. camping)o environmentally conscious consumers’ utility:

– Still agents interested in traditional products

– Firm’s profits:

/ 1

*0 0( ) ( )( ),

T gm n m

1 1 ,Gg gu p

0( )n m

*/ 1 2T g T


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Branding

3. m spread information i in their circles: – m increases & becomes m1

Þ Consumers – more sensible to environmental issues and boycott traditional polluting products

– Service provider creates a specific sustainable tourism brand (h)Þ c’ – cost of creating, maintaining quality and confidentiality of parent companyÞ Consumer’s utility function:

– Firm’s profits:

• But: consumers find out the financial links between the two brands & finally boycott the new sustainable brand...

2 1 1G Gg g gu u p

*/ 2 1 1( ) ( )( )T g m n m c

m i

( 0)


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Investing in quality

4. Service provider enhances the quality of the product

– Double effect: • It attracts tourists initially not interested in sustainable tourism products;• It erases service provider’s bad reputation as distributing also polluting products

– Consumers’ utility functions:

– Price chosen – reservation price of “traditional” tourists– Service provider’s profits:

4 4Tg gu p

4 4Gg gu p

*/ 4 ( ')T g n c


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– Environmental standards become general norms–

Still a group of consumers - more interested in luxury standards than in environmental issues:

2 stationary solutions possible: or

Investing in quality

n m

1 1max ,min 0, ( )t t t

b bm n a m n m

i i

0m1

m na

Stable solution


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New competitor’s entry and the industry’s role in diffusion of environmental norms

• Arrival of a competitor on the traditional market – service provider’s possible actions:– Duopoly (co-existence strategy)

• Each service provider specializes in specific product on specific market:

Incumbent – sustainable tourism product & entrant – traditional product

– Elimination pricing• Incumbent’s profits:

– No quality enhancement 3 ( )g n

61

eg

cn c

n m

5 1g m c


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Comparison of incumbent’s profits while implementing co-existence, elimination and no quality enhancement strategy


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Stylized Facts

• 47% of French in 2011 (1st time since 2006) – more concerned with environmental issues then economic problems…

…but 78%: sustainable products – too expensive;and 91%: sustainable products – more expensive than other

products;

• 90%: “green” brands should belong to groups or companies involved in global sustainable development approach;

• 66% consumers rely on labels; (ImagePower® Global Green Brands 2011 study by PSB for Cohn & Wolfe and Landor

Associates)


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Belambra’s Case

• 2007 – beginning of Sustainable Development mission;• 4th in 10 top green brands in France (Green Brands 2011);

• Actions:– Resorts’ renovation to correspond to new standards including

environmental norms (use of environment respective materials etc.) – Energy saving lamps;– Waste sorting and recycling; – Test of remote control of electronic devices in 4 resorts; – Preserving natural environment on the sites;– Internal evaluation program measuring environmental norms’ respect

and implementation.


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Belambra’s Case

• New resorts constructed in accordance with High Environmental Quality norms/program (ex: Very High Energy Performances);

• Staff sensitization to environmental issues;• Promotes local employment;• Responsible purchase approach:

– environmentally respective cleaning products;– electric vehicles;– eco-certified construction materials;– deliveries’ optimization;

• Partnership with LANEO (support environment preservation actions and education programs).


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Club Med’s Case

• 2004: quality standards’ update upmarket strategy– Project: “Cap sur l’Incomparable”

• 2007: creation of the top quality range “5Ψ”;• “Quali Signs” – global and characteristic to each resort quality

standards;

• 2006: demand influenced investments in environmentally respective high quality amenities.


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2008 2009 2010 2011

Total number of resorts

76 75 74 71

Number of eco-certified resorts

1(Opio en Provence; 1st EU

eco-certified resort in France)

2 8 23

Percentage of eco-certified resorts

1,3% 2,6% 11% 32%

Number of eco-certified resorts

source: Club Méditerranée Annual Report 2011

Distribution of eco-certified resorts in the world (total):– Europe - Africa: 17 (50)– Asia - Pacific - Oceania: 1 (9)– Americas: 5 (11)

Club Med’s case


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Club Med’s case

• Customers satisfaction score: 85,1% in summer 2011

• Actions:– 100% waste water cleaned ;– 55% of resorts perform waste tracking; – 10% of energy comes from renewable sources;– 12% reduction of CO2 emission;– Biodiversity protection programs (& educative programs) in

Gregolimano, Opio and Corsican resorts (Cargese - Natura 2000 network)

– 95% of purchases - local;– 76% of employees - locals;


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Results & Further research • Evolution of service provider’s offer given the modification of demand

preferences:– depending on m and g

• Analysis of branding strategy – Demand heterogeneity– Reputation effects

• Importance of quality• Industry’s role in emergence of environmental norms

– Monopoly & competition cases

• Empirical examples

• Further research: • the role of local residents in the adoption of sustainable products and norms;• labelling.


Sustainable Tourism and the emergence of new Environmental Norms

Malgorzata OGONOWSKA & Dominique TORRE

Université de Nice – Sophia Antipolis, FranceGREDEG - CNRS

Thank You !

sustainable tourism and the emergence on new environmental norms

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