Sustainable Tourism and the Emergence     of new Environmental Norms   Malgorzata OGONOWSKA & Dominique TORRE      Malgorz...
Problem Definition                                                                  Local                                 ...
Problem Definition          Since 1990s: consumers’ awareness of pollution and                       environmental protect...
Related Literature (1/2)• Literature on sustainable tourism:      – Public policies assuring relationship between the loca...
Related Literature (2/2)• Price discrimination strategies in tourism            • Clemons, Hann & Hitt [2002], Gallego & v...
ISSUE  Given the modification of demand preferences, how    the service provider adapts its offer and reacts to          t...
General Settings – 5 stages:1.   No information on existing pollution     –     traditional product only2.   Public inform...
No information on existing pollution1. n agents interested in traditional products according to their   net utility functi...
Demand differentiation2. Information i on existing pollution appears and the new   segment of demand m (agents sensible to...
Product differentiation      – Service Provider adapts to the new segment of demand        & offers a sustainable tourism ...
Branding3. m spread information i in their circles: m  i     –     m increases & becomes m1                Consumers – m...
Investing in quality4. Service provider enhances the quality of the product                                            ...
Investing in quality     – Environmental standards become general norms     – nmStill a group of consumers - more interes...
New competitor’s entry and the industry’s role in diffusion of environmental norms • Arrival of a competitor on the tradit...
Comparison of incumbent’s profits while   implementing co-existence, elimination    and no quality enhancement strategy20-...
Stylized Facts• 47% of French in 2011 (1st time since 2006) – more concerned  with environmental issues then economic prob...
Belambra’s Case• 2007 – beginning of Sustainable Development mission;• 4th in 10 top green brands in France (Green Brands ...
Belambra’s Case• New resorts constructed in accordance with High Environmental  Quality norms/program (ex: Very High Energ...
Club Med’s Case• 2004: quality standards’ update  upmarket strategy      – Project: “Cap sur l’Incomparable”• 2007: creati...
Club Med’s case   Number of eco-certified resorts                                      2008                        2009   ...
Club Med’s case• Customers satisfaction score: 85,1% in summer 2011• Actions:      –   100% waste water cleaned ;      –  ...
Results & Further research• Evolution of service provider’s offer given the modification of  demand preferences:          ...
Sustainable Tourism and the emergence     of new Environmental Norms     Malgorzata OGONOWSKA & Dominique                 ...
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Sustainable Tourism and the emergence on new Environmental Norms

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Sustainable Tourism and the emergence on new Environmental Norms

  1. 1. Sustainable Tourism and the Emergence of new Environmental Norms Malgorzata OGONOWSKA & Dominique TORRE Malgorzata.Ogonowska@gredeg.cnrs.fr Dominique.Torre@grdeg.cnrs.fr Université de Nice – Sophia Antipolis, France GREDEG - CNRS
  2. 2. Problem Definition Local population TOURISM includes wide range of economic activities Environment20-21/09/2012 Nice 2nd International Conference on Tourism Management and 2 Tourism Related Issues
  3. 3. 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)20-21/09/2012 Nice 2nd International Conference on Tourism Management and 3 Tourism Related Issues
  4. 4. 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]20-21/09/2012 Nice 2nd International Conference on Tourism Management and 4 Tourism Related Issues
  5. 5. 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]20-21/09/2012 Nice 2nd International Conference on Tourism Management and 5 Tourism Related Issues
  6. 6. 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 agents20-21/09/2012 Nice 2nd International Conference on Tourism Management and 6 Tourism Related Issues
  7. 7. General Settings – 5 stages:1. No information on existing pollution – traditional product only2. 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 markets3. Agents integrate this information and environmental issues in their decisions – m grows – new brand emerge for sustainable tourism products4. Environmental norms become general norms – quality of sustainable tourism products improve – all agents consume the products5. Possibility of competitor’s entry on the traditional market – 3 incumbent’s reactions possible – The industry’s role in emergence of environmental norms 20-21/09/2012 Nice 2nd International Conference on Tourism Management and 7 Tourism Related Issues
  8. 8. No information on existing pollution1. n agents interested in traditional products according to their net utility function: uT    PT   Firm’s profits: *  n  PT  n(   ) T20-21/09/2012 Nice 2nd International Conference on Tourism Management and 8 Tourism Related Issues
  9. 9. Demand differentiation2. Information i on existing pollution appears and the new segment of demand m (agents sensible to environmental issues) – 0  m0  n – initially very small – Their utility decreases as traditional products generate pollution: uT     pT   , with     G – Service provider adapts the traditional product’s price: pT 2      – Service provider’s profits: T 2  n(    ) T 2  T *20-21/09/2012 Nice 2nd International Conference on Tourism Management and 9 Tourism Related Issues
  10. 10. 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: ug1     pg1   , G     – Still (n  m0 ) agents interested in traditional products – Firm’s profits: * / g1  m0 (    )  (n  m0 )(   ), T * / g1  T 2 T20-21/09/2012 Nice 2nd International Conference on Tourism Management and 10 Tourism Related Issues
  11. 11. Branding3. m spread information i in their circles: m  i – m increases & becomes m1  Consumers – more sensible to environmental issues and boycott traditional polluting products (   0) – Service provider creates a specific sustainable tourism brand (h)  c’ – cost of creating, maintaining quality and confidentiality of parent company  Consumer’s utility function: ug 2  ug1     pg1   G G – Firm’s profits: * / g 2  m1 (    )  (n  m1 )(   )  c T • But: consumers find out the financial links between the two brands & finally boycott the new sustainable brand...20-21/09/2012 Nice 2nd International Conference on Tourism Management and 11 Tourism Related Issues
  12. 12. Investing in quality4. 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: uT4    pg 4    g ug 4     pg 4    G – Price chosen – reservation price of “traditional” tourists – Service provider’s profits: * / g 4  n(   )  c T20-21/09/2012 Nice 2nd International Conference on Tourism Management and 12 Tourism Related Issues
  13. 13. Investing in quality – Environmental standards become general norms – nmStill a group of consumers - more interested in luxury standards than in environmental issues: Stable   b b mt  max  n, min 0, a(mt 1  )  n  mt 1     solution   i i  1 2 stationary solutions possible: m  0 or m  n20-21/09/2012 Nice a 2nd International Conference on Tourism Management and 13 Tourism Related Issues
  14. 14. 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  g 5  m1       c – Elimination pricing • Incumbent’s profits:  ce   g6  n     c  n  m1  – No quality enhancement  g 3  n(   ) 20-21/09/2012 Nice 2nd International Conference on Tourism Management and 14 Tourism Related Issues
  15. 15. Comparison of incumbent’s profits while implementing co-existence, elimination and no quality enhancement strategy20-21/09/2012 Nice 2nd International Conference on Tourism Management and 15 Tourism Related Issues
  16. 16. 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)20-21/09/2012 Nice 2nd International Conference on Tourism Management and 16 Tourism Related Issues
  17. 17. 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.20-21/09/2012 Nice 2nd International Conference on Tourism Management and 17 Tourism Related Issues
  18. 18. 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).20-21/09/2012 Nice 2nd International Conference on Tourism Management and 18 Tourism Related Issues
  19. 19. 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.20-21/09/2012 Nice 2nd International Conference on Tourism Management and 19 Tourism Related Issues
  20. 20. Club Med’s case Number of eco-certified resorts 2008 2009 2010 2011Total number of 76 75 74 71resortsNumber of eco- 1 2 8 23certified resorts (Opio en Provence; 1st EU eco-certified resort in France)Percentage of eco- 1,3% 2,6% 11% 32%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) 20-21/09/2012 Nice 2nd International Conference on Tourism Management and 20 Tourism Related Issues
  21. 21. 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;20-21/09/2012 Nice 2nd International Conference on Tourism Management and 21 Tourism Related Issues
  22. 22. Results & Further research• Evolution of service provider’s offer given the modification of demand preferences: – depending on m and • 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.20-21/09/2012 Nice 2nd International Conference on Tourism Management and 22 Tourism Related Issues
  23. 23. Sustainable Tourism and the emergence of new Environmental Norms Malgorzata OGONOWSKA & Dominique TORRE Université de Nice – Sophia Antipolis, France GREDEG - CNRS Thank You !

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