Circular Economy in Travel and Tourism

· Transforming Vision Into Action ·

*This article was originally published by the World Tourism Organization (UNWTO), the United Nations agency responsible for the promotion of responsible, sustainable and universally accessible tourism. 

The global tourism industry has been going through an unprecedented crisis since the start of the COVID-19 pandemic with further issues brought around by the most recent economic and geopolitical turbulence. The crisis prompted tourism public and private actors to rethink the short, mid and long-term future of the industry.

When the COVID-19 crisis hit, a mix of supply and demand side megatrends, such as digitalisation, overtourism, GHG emissions, environmental and social impacts, customer and regulatory accountability demands, were increasingly raising questions about the industry’s linear growth-based model.

While the COVID-19 pandemic challenged long-established economic constructs, it also presented a rare opportunity to change the economic ‘software’. A shift to a sustainable Circular Economy represents this major software update we urgently need.

This summer visitors’ numbers show an industry firmly on the way back to business as usual, in Europe at least. The extreme weather events witnessed in the US, Europe, China this summer shall act as a red flag for the industry, an urgent call to address the most urgent of megatrends: the environmental crisis.

As with any complex problems, solutions are multiple and … complex.

circular economy tourism travel

A solution to address the multi-pronged challenges the tourism industry face, is to deploy a Cicular Economy transformation.

So far, the Circular Economy discourse has predominantly focused on tangible goods and production industries. tThis focus on tangible product manufacturing underestimates service dominated industries, such as travel and tourism, and their role in the global Circular Economy transition.

The tourism industry is deeply interlinked with and dependent on multiple key resource flows, asset and commodity value chains in society – from agriculture to food, to the built environment and transport industries to name a few. Travel and tourism actors can act as powerful enablers of circularity and benefit from shared circular value creation and value capture within relevant value chains.

To build back better, a new thinking, a new framing of tourism activities is needed. All tourism sectors should question the purpose of their operations and the natural, social, economic impacts of their business models. The white paper, Circular Economy in Travel and Tourism, explores how Circular Economy principles could guide a more sustainable, resilient and future-proof tourism development in line with the UNWTO One Planet Vision.

ecology tourism travel

Each tourism industry sectors and actors exhibit differences in type and intensity of assets and material use (from asset light to asset heavy), level of servitization, type of customer engagement etc. and thus different types of circularity and circular business model potential and levers. Consequently, Circular Economy transformation pathways will differ between sectors and market contexts.

For asset heavy businesses, circular procurement is a key lever for enabling circularity in the upstream supply chain, powering initiatives that extend and optimise material and asset use and avoid waste.

For asset light businesses, delivering non-tangible services, market positioning and differentiation through circular, collaborative and purpose driven business propositions with the aim to deliver a positive impact for all stakeholders would likely be a powerful circular transformation lever.

Multiple initiatives are needed for the tourism industry circular transformation to happen at scale.

  • Education and awareness building about the Circular Economy as a profitable, fair, optimised and holistic economic model applicable to all tourism actors at the macro, meso and micro levels is essential.
  • Investment in research to demonstrate the financial, environmental and social benefits of a circular, regenerative by intent tourism ecosystem is necessary.
  • And, very importantly, more public-private tourism stakeholder collaborations and cross-industry coalitions to explore innovative circular business models and transition pathways in a manner that sustainably integrates tourism as core economic development lever in regional and national policy making and circular economy strategies.

All too theoretical you might argue. Using the well known butterfly diagram from the Ellen Mac Arthur foundation, the below diagram provides an illustration of how a Circular hotel operator could transform its operations by deploying Circular Economy principles and core business models archetypes.

An example of how the circular economy principles can be applied to tranform a hotel operator business model

All tourism actors need to learn and embrace concepts such as ‘deep cooperation’, ‘value co-creation’, ‘destination carrying capacity’,system optimisation’ (instead of commercial silos maximisation)’, ‘purpose driven operations’. The framing of destinations needs to evolve from a ‘commodity’ that can be consumed, exploited to that of an ‘asset’ made of natural and social stocks that should be protected and optimised for the long term benefit of all stakeholders.

The need for a new positive tourism paradigm regenerative of natural and social capital operting within planetary boundaries is pressing. The Circular Economy offers a compelling new paradigm and a set of tools to guide an innovative, balanced, resilient tourism industry recovery and sustainable future.

Fabrice Sorin, Circulab Academy Manager

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