strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: April 1, 2008

 
 

Competing on the Eco Front

Environmentally friendly countries have a leg up in the competition for international travelers, but sustaining that advantage takes work.

Why do travelers — be they on business or just visiting — prefer to go to Switzerland rather than, say, Ukraine? It’s no surprise: Switzerland offers a much more attractive combination of factors. It’s easy to get there and to travel within the country, it’s clean and visitors feel safe there, and Switzerland’s combination of traditional culture and natural beauty is justly famed all over the world. Yet the continued popularity of Switzerland and other desirable destinations is by no means a given. Maintaining the relative purity of the environment while promoting and growing tourism is critical as competition intensifies among regions to attract the ever-growing number of travelers.

A recent study by Booz Allen Hamilton (part of the World Economic Forum’s Travel & Tourism Competitiveness Report 2008) found that environmental factors may determine whether travel and tourism sectors thrive or falter in the coming years. The report evaluated the health of the tourism industry in 130 countries based on 14 pillars important to travelers, private operators, and public authorities — including regulatory framework, infrastructure, and cost to natural, cultural, and human resources. This year, for the first time, the index also ranked each country according to its environmental sustainability. Among the items examined were the stringency of environmental regulations and the extent to which they are enforced, carbon dioxide emission levels, and the percentage of the country’s species that are endangered.

The study found a direct correlation between countries that score well on the overall competitiveness index and those that score well on the sustainability component. Switzerland, for instance, is ranked number one overall out of the 130 countries in the index and number two in environmental sustainability, whereas Ukraine comes in at number 100 overall and number 83 in environmental sustainability. That helps explain why Switzerland’s travel economy brought in an estimated US$60.9 million in 2007 and Ukraine’s was worth just $11.3 million, even though Ukraine is almost 15 times the size of Switzerland.

Ironically, a boom in tourism, although desirable, often leads to degraded environmental conditions — and in time to fewer tourists — unless a country takes sustainability seriously. Large numbers of visitors alter patterns of development, impinge on natural resources, tax limited water and food supplies, and create pollution, scaring away future visitors. Just ask anyone who has visited an unspoiled beach and returned a few years later to find the sand eroding thanks to construction, the water spoiled by sewage, and the coral reef decimated by toxins or careless divers.

The correlation between environmental sustainability and economic development is much weaker. The U.S. ranks first on the overall economic development component, but just 100th in environmental sustainability, thanks to weak regulatory measures to combat global warming, inefficient energy consumption, and high levels of air pollution in major cities. Kenya, however, is ranked 19th on the environmental sustainability component, but only 102nd in overall economic development, due to low scores in ground transportation (ranked 107th), information and communications technology (108th), and tourism infrastructure (98th).

Improving the environmental sustainability of a country’s travel industry is not a simple matter of cleaning up the environment and laying down restrictive laws regulating what such industry players as airlines, resort operators, and developers can and cannot do. The private sector has long been averse to spending additional money to comply with environmental regulations unless a clear business case can be made for doing so. But environmental sustainability will be critical for all countries seeking to improve their travel competitiveness in the long term. The private sector must be induced to become part of the effort and thus to view sustainability not as a threat but as an opportunity. As concern for the environment grows — not least among the eco-conscious and often wealthy travelers countries hope to attract — the quality and sustainability of a country’s environment will become part of its global travel “brand.” The question is how best to establish, promote, and continuously manage an environmental strategy that forms this brand.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

Resources

  1. Viren Doshi, Gary Schulman, and Daniel Gabaldon, “Lights! Water! Motion!s+b, Spring 2007: How to revitalize the crumbling infrastructure on which so many countries’ travel industries depend.
  2. Volkmar Koch, Jürgen Ringbeck, and Stefan Stroh, “Travel 2.0,” s+b Leading Ideas Online, 2/5/2008: The travel industry needs to develop a keen understanding of customer habits and tastes.
  3. Jürgen Ringbeck and Stephan Gross, “The Importance of Being a Must-See Destination,” s+b Leading Ideas Online, 5/8/2007: How a strong travel and tourism sector contributes to a country’s overall economy.
  4. World Economic Forum, The Global Competitiveness Report 2007–2008: An analysis of the global competitive environment.
  5. World Economic Forum, The Travel & Tourism Competitiveness Report 2007: View last year’s report to examine how the travel competitiveness of countries changes over time, sometimes rapidly.
  6. World Economic Forum, The Travel & Tourism Competitiveness Report 2008: Essential reading for anyone concerned with promoting the travel industry, or just being a tourist.
  7. The International Air Transport Association Web site: The airline trade association’s insider take on its contribution to environmental sustainability.