1. A consistent rise in optimism

In the two previous waves of the Accommodation Barometer, seven out of ten respondents consistently reported good or very good business developments. Although the year isn’t over yet, the European travel and tourism sector is on track to exceed hoteliers’ expectations, creating a continuous wave of optimism.

2. Regional leaders

Nordic accommodations have taken the lead, with eight in ten characterizing their summer season as good or very good. The avoidance of scorching summer heat waves might have contributed to their success. Southern destinations, which never go out of fashion, such as Portugal and Italy closely follow, with 76% of respondents reporting good developments in the recent past.

3. Positive economic indicators

Over the last six months, 62% of European accommodations reported increased room rates, a solid rise from the previous period. Occupancy levels continued their upward trajectory, with 68% experiencing an increase, thus reaffirming that the survey results reflect actual occupancy figures.

These positive economic indicators have instilled confidence among hoteliers, with 72% characterizing past developments as good or very good, and 68% viewing their current economic situation favorably. In contrast, only 4% saw adverse developments over the past half a year, while a mere 5% consider the current economic situation negative.

4. A majority expects continued growth

Looking ahead, the majority of hoteliers (59%) are now expecting a positive or very positive development in the next six months, marking the first time in the Accommodation Baromter’s history that this number has crossed the halfway mark. As winter 2023/2024 approaches, the year has already delivered beyond expectations.

5. The cases of Germany, Austria, and the Netherlands

Hoteliers’ sentiments from Germany, Austria, and the Netherlands diverge from the overall EU trajectory, most notably from the upward trend in assessing past and current performance. While the rest of Europe posted an improvement across all 3 waves, these countries have not seen the same continuous upswing as their neighbors.

Germany’s Barometer results, on the other hand, appear to reflect the country’s current economic woes. Although German hoteliers matched their EU neighbors’ assessment of past developments at 71% seeing it in a positive light, the appraisal of the current state of affairs diverged by 19 percentage points – 49% rating it as good or very good in Germany versus 68% average across the rest of EU countries covered by the Barometer.

Optimism for continued growth is even lower, with just a third (32%) of accommodations indicating that they think their business will develop positively in the next 6 months, compared to the EU average of 59%.

6. Chain hotels dominate while investment appetite levels out

The European Accommodation Barometer demonstrates that hotel chains maintain a noticeable edge over smaller, independent accommodations across various economic metrics. Independent businesses are doing well, but chain businesses are doing even better and lead in areas such as access to financing, occupancy, and room rate development, indicating the economic benefits of size and scale.Ultimately, 66% of independent accommodations said that their current economic situation is good or very good, compared to an impressive 75% of branded chains.

Investment appetite among accommodations is beginning to stabilize, with a larger proportion of chains prepared to invest more in their business in the next six months. At Booking.com, we strongly believe that Europe can and should do more to help small travel and tourism businesses. We should also recognize the pivotal role online travel agencies play in empowering independent accommodations to compete with branded chains.

7. Regional distinctions and growing challenges

There are variations across the EU. While European accommodations as a whole are moving along an upward trendline, individual countries face unique challenges. Rising costs, especially in energy prices and staff wages, have presented difficulties for hoteliers in Germany, France, the Netherlands, and the Nordics.

Greece and other southern destinations like Italy, Spain, and Portugal reported robust room rate and occupancy rate growth. The EU average for the positive response rate in those areas reached 62% and 68% respectively, but these four Southern European countries averaged at an even more impressive 73% for room rate and 71% for occupancy rate growth satisfaction.

8. Maximizing opportunities and meeting guest preferences

As the European accommodation sector returned to the pre-COVID numbers, hoteliers’ eternal priority of maximizing occupancy has reemerged in full strength. Listing on digital platforms was nominated as the most effective tool at 51% support, closely followed by offering targeted discounts (49%) and investing in esthetics (43%). Less important were the old-school mechanisms of selling rooms to wholesalers or marketing on traditional media.

European accommodations are adapting to guests’ new preferences for vegan, locally sourced, and packaging-free food and drink options. Focusing on unique customer experiences through culinary choices, such as offering locally grown and sustainable options, has become a priority. Hoteliers are aligning with customer demands while the enthusiasm for AI technology appears to be waning.

The European travel and tourism sector, according to WTTC, is expected to reach €1.5 trillion this year. Without a doubt, our industry is an engine of local economic growth and job creation – adding 2 million jobs in 2022. And, in a world full of uncertainties, Europe’s travel accommodation sector stands as a testament of resilience and innovation.

L’article Europe’s travel accommodations sector surpasses pre-Covid benchmarks in 2023 est apparu en premier sur Travel Tomorrow.

Booking.com partnered up with Statista Inc. to bring you the second edition of the European Accommodation Barometer, shedding light on the latest economic performance, challenges, and expectations of hoteliers across Europe.

This comprehensive survey, encompassing responses from over 1,000 participants, provides a valuable insight into the prevailing sentiment within the industry. It could serve as a tool for decision-making or policy formulation. Barometer mirrors the hopes and fears of European hospitality professionals — women and men who work hard to delight their guests and offer unforgettable experiences.

Stakeholders within travel & tourism and beyond are eagerly awaiting a rebound, given the size and importance of our sector. After all, in 2019 — the last pre-pandemic reference year — travel & tourism was responsible for over 22 million jobs (11.2%) of the EU’s total workforce and contributed €1,3 trillion (or 9.5%) to the bloc’s economy. But what shape will the recovery take? Can the sector outpace the average GDP growth rate again?

1. Hard times don’t last forever

Breathing a sigh of relief after a few tumultuous years, the majority of hoteliers view the recent past in a positive light. In fact, the overall sentiment is nothing short of extraordinary! For every accommodation in Austria that assessed the developments over the last six months as poor, there were 81 who thought they were good or very good. Even for countries with a lower ratio, like France and Greece, the celebratory mood eclipsed the pessimism six to one.

While positive trends are observed across Europe, there are regional disparities. Spain, Portugal, Austria, and the Nordic countries are more optimistic about the current state of affairs and future outlook, while France, Italy, and Greece have more subdued assessments.

Assessing the next six months, every second travel property in Europe is feeling cheerful. One-third are neutral, and only one in ten is feeling gloomy. Portuguese hoteliers are the most optimistic about the future, having seen some of the strongest growth in occupancy and room rates.

Spain and Greece expressed the most upbeat revenue outlook, reflecting their popularity among summer vacationers. More than others, the beach and seaside establishments expect 2023 to be a record-breaking year. Tellingly, 57% of accommodations see the increased appreciation for travel as a significant business opportunity. And, to top it all off, occupancy levels and room rates have increased for the majority of European accommodation businesses over the past six months.

2. Government policies

Accommodations across Europe recognize the importance of government policies vis-a-vis their business success. Even in countries where this sentiment is a bit more subdued, like France, UK, and The Netherlands, the ratio of respondents who believe that policies matter is two to one versus those who do not.

There is less of a consensus when it comes to the impact of the said government policies. Hoteliers in Italy, Germany, Austria, and Grece still view them as mostly harmful. At the same time, their counterparts in Portugal, The Netherlands, and the Nordics consider government policies to be beneficial as far as their expected net impact.

While Covid-19 and travel restrictions are becoming less significant concerns, energy costs remain the top challenge for the accommodation industry. Furthermore, the survey respondents are worried about the macroeconomic conditions, staffing, and rising costs of inputs. Overall, the perception of challenges the industry faces has increased compared to the previous Barometer.

Infrastructure investments have been identified as a top priority, but European hoteliers also envisage a prominent role for their governments in the area of labor upskilling, investments in destination marketing, and digitalization of government services.

3. Challenges faced by individual and chain hotels

The survey reveals significant differences between individual hotels and chains, with independently managed properties facing greater challenges across all metrics covered in the accommodation barometer. They encounter more difficulties accessing capital; plus, their occupancy and room rates have seen slower growth.

Chain businesses are feeling bullish: around two-thirds (64%) anticipate a positive or very positive development in the next six months, up from 42% in 2022. Furthermore, the expectations for future performance are also higher for chain businesses compared to independently-managed establishments. Larger hotels and those with higher star ratings are in a better position than smaller ones with lower star ratings.

4. AI adoption

In the second edition of the European Accommodation Barometer, we introduced a question on AI, given its newly found prominence. By leveraging machine learning and artificial intelligence, hoteliers can streamline operations, improve guest experiences, and drive revenue growth. But the current rates of AI adoption are low. Perhaps, this reflects the very essence of what it means to host guests and to run a hotel: a human-experience-centric business at its core.

When it comes to the adoption of AI, hoteliers in the Nordic region were the most invested, with 13% saying they use it already. In The Netherlands, 32% of hoteliers were keen to start deploying AI in the next six months.

5. Onwards and upwards

As the old saying goes, knowledge is power. At Booking.com, we understand the importance of giving voice to key players in the European accommodation industry. Our goal is to generate insights and empower decision-making by our stakeholders, be they governments, parliaments, researchers, opinion leaders, travel sector financiers, or hoteliers themselves. Fortunately, there is reason for optimism. Europe’s accommodations are hopeful about their prospects, and the recovery is gathering speed. Given the vital importance of the travel and tourism sector to Europe’s economic success, we can all celebrate this remarkable comeback.

L’article European accommodation barometer signals record revenue expectations est apparu en premier sur Travel Tomorrow.

1. Online travel platforms and the risk of free-riding

Online travel platforms, such as Booking.com, have a simple business model. We offer hotels and other accommodations the opportunity to market and sell their rooms to consumers near and far. To be successful, Booking.com invests heavily in the latest technology, global marketing, and customer service in 40+ languages.

Using Booking.com is risk-free for hotels. Only when a consumer makes a booking via our  platform, do we charge a small commission fee to the accommodation. This so-called agency model aligns incentives: we are only successful when the accommodations on our platform are successful.

The agency model requires a minimum degree of trust and fairness. Because platforms are only remunerated for bookings made via the platform, there is always a risk free-riding on the platform’s services. Free-riding is simple. All hotels have to do is to inflate the price on a platform. If consumers are sufficiently aware of this price inflation, they will use platforms to find their preferred option, but then book it directly with the hotel.

For this reason, online travel platforms have long been using so called parity clauses. In essence, these clauses require hotels to offer consumers on online travel platforms a price that is at least as good as the one offered on its own website. Parity clauses guarantee a fair and balanced relationship between hotels and platforms. Hotels can generate additional business without any upfront investment and commercial risk. Platforms can ensure that they will be paid for the services provided to hotels.

With parity clauses, hotels are still free to offer lower prices on rival platforms, people calling or emailing the hotel, or those walking in. It is just the hotel’s own website that serves as the benchmark for offering fair and competitive prices on a platform.

The overall impact of online travel platforms on hotel prices is unambiguous. Because platforms increase choice and transparency, competition intensifies on and off the platform, resulting in lower prices for consumers, saving consumers billions of Euros every year.

2. A European standard for parity clauses and Germany’s diverging approach

In recent years, parity clauses have come under scrutiny from competition authorities and policy makers. Often, this has been the result of pressure from hotel associations, who actively promote free-riding on platforms. In 2015, Booking.com and Expedia entered into an agreement with the French, Italian and Swedish competition authorities, that established the current standard of permitting platforms to ask hotels not to inflate their prices vis-a-vis their own website. Other European authorities tacitly accepted this agreement as well.

That is with one exception: the German competition authority had always wanted to ban parity clauses for online platforms and issued a corresponding order in 2016. Booking.com successfully appealed this order in 2019. The Dusseldorf appellate court held that: “Parity clauses are necessary to ensure a fair and balanced exchange of services between the parties and it does not go beyond what is necessary to achieve the objective in terms of time, geography, or content.” This ruling, in turn, was successfully appealed by the German competition authority to the Federal Court of Justice (FCJ).

At the heart of the dispute are two questions: Are parity clauses restricting competition, or are they merely ancillary to an otherwise neutral or pro-competitive agreement? What is the relevant market for online travel platforms? The Amsterdam district court – dealing with preemptive follow-on litigation, initiated by Booking.com, from the German FCJ decision – has now decided to refer these two questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling. Finally, these questions will likely be settled by the highest European court.

3. Online travel: a world of choice for consumers and hotels

In particular, the question of market definition is an important one. For years, hotel associations have pushed the narrative that Booking.com is so big that hotels have become dependent on it. This is despite the fact that the hotel association’s own surveys show that online platforms account for not even a third of all bookings. While Booking.com is certainly a successful company, no hotel is forced to use it. At most, 14 percent of all hotel bookings in Europe are facilitated by our platform.

Moreover, as a recent study by the European Commission reports, the vast majority of hotels use more than one travel platform in parallel, and generally make use of a variety of distribution channels. Platforms and a hotel’s own website are substitutes for one another as can be seen from the fact that listing on an online platform also increases a hotel’s direct bookings. It also indicates that there is no competitive bottleneck or gatekeeper in hotel distribution. Hotels and consumers alike have a wide variety of choices to transact with one another.

The Amsterdam Court has now called into question the faulty logic that online travel platforms constitute a market of their own. The Court points out that market definition for multi-sided platforms requires careful consideration of the interaction between different user groups and the hotel’s own arguments point towards the direct distribution channel being part of the same market. If confirmed by guidance from the CJEU, this would clearly establish that there is no dominant platform in travel distribution. Given the low market shares for any individual platform and multi-homing behavior of consumers and hotels, it would also make it all but impossible to claim hotels are dependent on a particular platform.

Market definition for multi-sided platforms raises important legal questions beyond the present case and we hope the CJEU will use this opportunity to clarify fundamental principles of market definition for the digital economy.

L’article European Court of Justice to clarify competition law questions for online platforms est apparu en premier sur Travel Tomorrow.

This is particularly true when it comes to sales, marketing, and distribution. Few businesses have the know-how and the reach to serve every potential customer on their own. This is the reason why Nike sneakers are not just sold in Nike stores, and farmers sell their produce to wholesalers that will deliver it to a large number of local shops instead of catering to every consumer themselves.

Of course, this is not a binary decision and in practice companies will make use of a wide variety of distribution channels, including selling directly to consumers. The internet has made the latter a lot easier, and many businesses now have their own online storefront.

The accommodation sector is no exception. Hotels can advertise in travel magazines, sell rooms to tour operators such as TUI or ThomasCook, work with travel agencies, advertise their own website on Google or social media, partner with national or local tourism marketing organisations, and boost word-of-mouth marketing by offering unforgettable service. In fact, direct sales to consumers remains the most important sales channel for hotels.

The internet has also given rise to online platforms, such as Booking.com, that aggregate product offers and consumer demand. This generates significant benefits to everyone. First and foremost, consumers find it easier to search for, compare, and book a hotel or other accommodation. And hotels, on their part, get visibility to a large number of consumers around the world that would otherwise be hard to reach.

In a nutshell, this is the modern version of the traditional travel agency but with a much greater scale and reach. While in the past a travel agent would be able to service only a limited local audience within its capturement area, online travel platforms offer almost unlimited worldwide reach and are available in dozens of languages. And it’s always just one click away for consumers.

Technological advancements notwithstanding, the modus operandi remained essentially the same: online travel platforms, just like their physical counterparts, work on a success-fee basis, the so-called agency model. If, and only if, a consumer books their hotel room with the travel agent, does that said agent receive a remuneration. This practice has long been valued by the hotels because it is entirely risk free, with no upfront costs. Travel agencies provide a needed service, and hoteliers retain their full entrepreneurial freedom.

The hotels sets the room rates and decides on the terms and conditions. For example, they can charge a higher rate during peak season and a lower rate during off-season, and change it whenever they see fit. Online travel platforms are also often cheaper than other forms of distribution with, for example, standard commission rates averaging 15% for Booking.com. In contrast, tour operators will typically require a 25–40% discount on the hotel’s room rate as their own sales margin.

However, the internet has created new challenges for this business model. The agency business model is based on trust. Which is to say an implicit expectation that the efforts of the travel agent or the travel platform will be rewarded when generating additional business. This trust is undermined when hotels attempt to free-ride by encouraging consumers to find their hotel on an online travel platform but then (re-)book with them directly to eschew the commission payment. While free-riding has always taken place to a certain degree, the convenience of the internet, where everything is just one click away, has scaled the size of this problem.

In the past, consumers would face high hassle costs if they first made use of a travel agent but then turned around and tried to book the hotel directly in the hope of being offered a discount. As real-time online booking engines did not exist, one would have to call the hotel and inquire about prices and availability, or send an email or a fax and wait for a reply. The level of effort often didn’t justify the level of benefit, so it deterred most of the would-be-free-riders. Now, all it takes is real-time booking function on a given hotel’s website and concerted efforts to change consumer behaviour.

A study by EY-Parthenon “shows that 41% of direct bookings at smaller lodgings originate from customers finding the accommodation on a platform. As such, online platforms contribute an additional 15%–20% of bookings to the accommodation. These are bookings for which accommodation providers do not pay a commission to the platform.” In other words, free-riding has become a widespread practice. One that undermines the business model of online platforms and reduces our incentives to invest in technologies and services that have brought great benefits to consumers and hotels alike.

Online travel platforms have vastly improved the choice and transparency of offerings available to consumers, which ensures that consumers get the best value for their money. In 2019 alone, EU consumers saved €20 billion as a result.

On a flip side, the same year hotels benefited from 133 million of additional room-nights. Even during the two most difficult years for the travel accommodation industry, online platforms continued to generate additional bookings for our accommodation partner. The biggest challenge a hotelier faces is the highly perishable nature of an unsold room. In other words, the key driver of revenue is occupancy level. This is true for all properties, and double-true for the small and independent hotels.

Free-riding undermines all of these benefits and erodes the trust between platforms and accommodations that list on them. Hotels make a conscious choice to partner with platforms for sales and distribution. This partnership needs fairness and mutual trust. Without online platforms everyone would be worse off. Let us all work together and preserve this mutually beneficial business model.

L’article Why freeriding in online travel benefits no one est apparu en premier sur Travel Tomorrow.

In the hotel sector, however, the reverse is true: online travel agencies are not getting in the way of building relationships, but sparking relationships that would otherwise not have happened.

For any business to build a relationship with a customer, the said customer first needs to know that the business exists. Big hotel chains have the marketing budgets to get their brand names in front of travelers, but for smaller independent accommodation providers – especially outside of tourism hotspots – acquiring new guests is not so easy.

In Europe, the hotel sector is dominated by small and medium-sized enterprises, and that presents a unique challenge. According to 2019 research, 87% of Europe’s hotels are independent, providing 63% of room capacity.

Around 70% of guests who come from an online travel agency would not have been in an accommodation’s typical sourcing market, according to a survey of 600 independent European hotels by EY-Parthenon. Platforms like Booking.com are especially useful in reaching potential guests from countries further afield. Between 2009 and 2019, for example, the number of Chinese tourists in Europe grew fivefold. 

1. Low no-show

For hotels, online travel agencies are a way to showcase their property to millions of prospective guests, only for every successful booking. They also get the assurance that the guest is serious: Accommodation providers surveyed by EY-Parthenon indicated that the no-show rate is significantly lower for bookings through online agencies.

Establishing initial trust is an even more important function for potential customers, who need reassurance before they transact with a small business in a faraway place with which they are unfamiliar. Booking a room with an online travel agency significantly reduces the risk that the hotel is not going to disappear with their money, and the travelers gain a higher level of confidence that they will have access to customer service in the language of their preference if they encounter any issues.

Online travel platforms match services with consumers, and from there, it is up to the hotel to build the relationship. While the internet is changing many things, it hasn’t changed what people are looking for from a stay at a hotel – a pleasant experience with good service at a fair price. Having been introduced to the new customers by the online platform, the hotels have it fully within their control to delight the guests and thus win travelers’ trust and loyalty.

An added benefit is the power of authentic customer reviews, which the Yale School of Management termed the digital word of mouth. “Almost 90% of consumers trust online reviews as much as they trust personal recommendations.” On platforms like Booking.com, customers reward excellence with generosity, and the hotels with exceptional review scores enjoy increased demand.

Following the first stay facilitated by an online platform, hoteliers can subsequently keep in contact with the guest, ask for feedback, make exclusive direct offers, etc. Customer experience is absolutely central, and an unforgettable one can develop into a long-term relationship with multiple repeat visits. In such cases, the commission fee on the original booking comes to represent a smaller and smaller proportion of the value of the relationship.

2. The billboard effect

Often, the direct relationships between travelers and accommodations get initiated by the online platforms at no cost at all. As research by EY-Parthenon shows, around 40% of direct bookings via a hotel’s own website come from the “billboard effect” of online agencies. In other words, the customers first discover a hotel through a website such as Booking.com, then do further research and end up booking directly.

According to researchers who looked at accommodation providers in Belgium – a country where the most detailed records are publicly available – the smallest hotels experienced proportionally the biggest benefits from partnering with an online travel agency. There are many reasons not to be surprised by this – the smaller the company, for example, the higher the hurdle they need to jump over to stay competitive with the larger internationally recognised brands.

On a flipside, the independently managed, smaller hotels are often best placed to offer a personalised experience to their guests, which can kick off a virtuous circle: a happy customer leaves a glowing review on Booking.com, which increases the chance of future potential guests choosing their accommodation, giving the hotel another opportunity to build a direct relationship with a new customer. It is this virtuous circle that online platforms are proud to facilitate.

L’article Don’t be a stranger: how online platforms help hotels build relationships with their guests est apparu en premier sur Travel Tomorrow.

With inflation putting a squeeze on household finances, a growing number of people are at risk of being priced out of leisure travel. However, research suggests that online platforms, such as Booking.com, could play an important role in keeping tourism affordable for the many and not just a luxury available for the few.

Before the pandemic, decades of progress in democratising travel had helped to bring people closer together by promoting cross-cultural exchange and understanding. In 2019, 65% of Europeans made at least one trip for tourism. Yet, before the pandemic hit, “29% of the EU population aged 16 or over could not afford a one-week annual holiday away from home,” according to Eurostat. Travel might be opening up again, but affordability concerns remain.

Prices are spiking around the world. In the United States, for example, the latest figures say many travel-related costs are rising particularly quickly — rental car prices are up by 23.4% year on year, airfares by 23.6%, and hotel rooms by 25.1%, compared to an overall inflation rate of 8.5%. Two in five Americans plan to cut back on planned travel as a result, according to one recent survey. The story is similar in Europe, where accommodation providers are struggling with the higher costs of electricity, gas, and food.

Rising prices are driven not just by the cost of inputs, but also by pent-up demand from wealthier consumers who have been able to accumulate savings during the pandemic. As they rush to catch up on travel, those on a lower budget are being priced out.

But there is a reason for some cautious optimism that online travel platforms will cushion the blow. Before the pandemic, Booking.com commissioned Tourism Economics — part of the Oxford Economics group — to analyse the impact of online travel agencies (OTAs) on the overall market in Europe.

The average rate per night for accommodation booked online stayed fairly constant through that period covered by the study, while the average rate for the sector as a whole increased by 17%. That could, in part, reflect changes in the types of trips booked through online travel services, so we asked Tourism Economics to analyse more precisely their impact on prices.

The researchers found that if online travel agencies had not existed, chain hotels in Europe would have been charging 4.2% more in 2019, while independent hotels would have been charging 10% more. Across the market as a whole, this means people were paying an average of EUR 11 less per night than they would otherwise have done because of online travel agencies.

How do online agencies help to keep prices down? One way is by giving consumers greater transparency, so they can be confident they are getting the best deal on a travel experience that meets their needs. Another is by giving accommodation providers access to analytics, which helps them to pitch their rooms at a competitive rate.

But as more families weigh up whether they can afford a holiday, a different benefit of online travel agencies may come to the fore: they make it easier for people to find travel options in locations that are less well known and often less expensive.

Looking at France as an example, we found that the chain hotels gravitated towards the most economically successful parts of the countries, whereas the small & independent hotels covered the entire map. In the tourism hotspots — the top quartile of chain penetration within Booking.com listings —the average GDP/capita reached €33,400, but for the bottom quartile, it was only €25,400. For smaller properties in these off-the-beaten-track areas, online travel agencies provide a low-cost and risk-free way to make themselves known to cost-conscious travellers.

As one accommodation provider put it, in a survey conducted by Booking.com and EY-Parthenon: “Guests are more willing to make a booking via a trusted platform that also facilitates the transaction. This especially holds for places they are not familiar with.” In some respects, the search for affordability comes with a silver lining; it could open new horizons and lead to discoveries of unexplored destinations.

COVID presented the biggest challenge the modern travel industry ever faced. Now, our sector is poised for recovery, so the accommodation providers, small and large, are eager to revitalise their businesses and recoup losses. Nevertheless, we have to remain cognisant of the threat inflation poses to the most price-sensitive consumers, and we must not take the democratisation of travel for granted.

L’article Online travel platforms vs. inflation. What does it take to keep holidays affordable? est apparu en premier sur Travel Tomorrow.

Accommodations account for roughly 10% of the total annual emissions of the tourism sector. A pioneering study by EY Parthenon found that accommodations will have to invest €768 billion over the next two decades to achieve net zero – €243 billion in greenhouse gas (GHG) abatement measures and €525 billion for greening the energy supply of the remaining emissions. This is a significant figure, and to put it in perspective, this is roughly equivalent to the combined annual revenue of the global accommodation sector.

1. Accommodations can lead the climate transition of the tourism sector

While the decarbonization of the sector is a major challenge for the entire industry, the good news is that there is significant potential for emissions reductions that are profitable to accommodations. These measures provide accommodations with a double dividend: they cut both emissions and operating costs. Moreover, as the study shows, net zero emissions are feasible with existing technologies. In contrast, other parts of the tourism industry, e.g. aviation, still require the development of new technologies to enable the required transformation. Accommodations thus have an opportunity to be a frontrunner and lead the climate transition of the tourism industry.

That is not to say these emission reductions are easy to achieve. Significant upfront investments are still needed at a time when accommodations around the world are only slowly starting to recover from Covid-19. There are also opportunity costs to these investments. However, it does provide an opportunity to heed the call for urgent action and achieve timely progress in decarbonizing the sector. Over time, accommodations can tackle more challenging and more costly reduction measures.

2. The benefits of adopting the most efficient technologies

A wide range of carbon-saving practices is available for accommodations to reduce usage of natural resources, energy, and waste disposal. The potential amount of CO₂-equivalent that can be abated with 24 specific abatement measures identified in this study amounts to 87Mt annually. This means that an accommodation can in principle reduce its total GHG emissions by up to 32% with these measures. A large share (c. 58%) of these measures have a positive business case over a 15 year investment horizon and account for c. 76% of the total abatement potential.

Taking into account the current adoption levels, accommodations can achieve an actual reduction of total current emissions of 15–20% by implementing the most efficient available

The study provides a detailed derivation of the potential and abatement costs for each measure, taking into account different climate zones, energy mixes, and accommodation types and sizes. This menu of measures provides accommodations with the opportunity to create their own transition path in abating the direct emissions from their operations, taking into account their individual circumstances, and increasing their ambition and (financial) commitment over time. In the aggregate, it provides a roadmap for the accommodation sector to achieve net zero emissions by 2050.

3. Barriers to implementation

However, a large-scale survey of accommodation providers shows that there are important barriers to progress and realize the full abatement potential. The most important are: an insufficient sense of urgency, knowledge gaps, and a lack of access to financial resources.

3.1. Lack of urgency

A lack of urgency is the most important barrier to implementation. For a majority (51%) of the remaining abatement measures, accommodations do not feel the need to take urgent action. Many accommodations are driven primarily to create a positive guest experience and improve their profitability. Decarbonization measures are implemented with these objectives in mind. Showing how investments improve their operational efficiency and how inaction will ultimately be more costly (e.g. due to higher energy costs) are important levers to drive their ambition and unlock additional efforts.

3.2. Knowledge gaps

Knowledge gaps and lack of access to relevant information are important barriers for about one third (30%) of the remaining measures. A large group of accommodations are generally ready to be more ambitious in reducing GHG emissions. They have already implemented many measures but are lacking relevant information to enable them to implement even more. This includes a lack of data about the sustainability impact of specific measures, the financial implications, and practical considerations (e.g. impact on guest experience during implementation). Providing accommodations with tailored information and support can unlock this potential.

3.3. Lack of financial means

A lack of financial resources or access to capital are hindering progress on one fifth (20%) of the remaining measures. While many emission reduction measures are generally profitable over a 15 year investment horizon, they might require significant upfront investments. Some measures are also not profitable at all and thus require a larger commitment by accommodations.

Financial incentives are an important trigger to unlock this reduction potential with the majority of accommodations (78%) indicating that subsidies are more important than loans. Overcoming these challenges and increasing overall ambition will not be easy. But what is true across economic sectors applies here as well – cooperation among all industry stakeholders — governments, travel associations, travel platforms, chains, NGOs, advisers, travelers is the shortest path to net zero. If we work together we can unlock these investments and master the climate transition of the industry.

Download the full study here

L’article The journey to net zero emissions for travel accommodations est apparu en premier sur Travel Tomorrow.