Sustainable Supplier Development in tour operations

Karen Schwartz

Mass Tourism. Whatever happened to ‘Sunlust’ Tourism?

ATLAS SIG MeetingCoventry University

14 May 2007

Outline The emergence of Sustainable Supplier Development (SSD) in

tour operations Influences on engagement in SSD

SSD activities

Challenges and recommendations

What is Sustainable Supplier Development (SSD)?

Any effort by tour operators to improve the performance and/or capabilities of suppliers, in order to improve the sustainability of operations

Customer interestSpecialists: Where there is customer interest, it is not reflected in a willingness to pay “Passengers do not put their money where their mouth is and though they say they will pay more for a responsible product they don’t. That’s a fact!”

Mass: Little evidence of customer interest in mainstream brands, great focus on low cost“Some consumers have got an interest in it, some don’t give a damn. Some just want it at the lowest price possible!”

Business characteristics

Specialists: differ through informal management, sometimes based on a ‘desire to give something back’, sustainability may be a key part of the product

“It’s the nature of the business to look after the nature of the resource we use.”

Mass: more formal management, greater relative resources but have to get the ‘buy-in’ from more shareholders and different departments

“Unfortunately people are too scared to tackle it because it could hurt profitability.”

Supplier characteristics

Specialist: challenges = limited supplier availability, a lack of destination infrastructure and facilities to address some environmental impacts“In many countries it’s almost impossible because either the technology does not exist, or if you ask people to recycle, and there’s no recycling facility there, you simply can’t do it.”

Mass: Some destinations provide the infrastructure, and global chains may be pro-active in environmental management “I think Lanzarote and Majorca are probably the most advanced and sophisticated, and most set up with the systems and infrastructure, but it isn’t typical of say the Eastern Mediterranean or many of the long haul destinations.”

Formal assessment & guidance Specialists: Informal, dialogue based assessment, but some

are interested in using more formal tools

“I’m sure that formalizing things would enable us to have a greater understanding of what’s going on and to help the suppliers to understand how serious we are about this.”

Mass: Operators have begun to roll out the FTO supplier sustainability assessments

“I think the first thing is to find out exactly what the issues are, we don’t know what the issues are here, or in resort.”

Company classifications/awards

Specialists: most questioned if suppliers would value awards

Mass: FTO launch of the ‘Travelife’ assessment & award scheme

TOUR OPERATORS AND SSD Shorter Longer term?? Assessments Company awards Written guidance Dialogue SSD criteria in

‘responsible tourism’ policies

New product development

? Widespread, formal assessments

? Full reporting? Widespread promotion of

classifications/awards? Detailed contractual

conditions? Supplier training? Pre-payments/investments

It is early days, and businesses differ in the level of commitment/engagement. However, if the current momentum continues, incremental changes could lead to significant results.

Challenges

Financial and human resources

Customer demand Competitive environment Benefiting competitors First-mover advantage Association-led or genuine

commitment Company-wide integration Internal management

prioritised Supplier

capacities/availability/outlook

Recommendations

PRE-REQUISITES: Fair pricing, long-term partnership consistent volume of business

Phased & systematic approach: by destination, impact, product or supplier type/importance

Understanding of supplier performance through regular assessments and monitoring

Awareness-raising: staff, customers, suppliers and other stakeholders

Greater focus on socio-economic issues

Greater focus on transport & food/craft suppliers

Evidence of a business case

“It is better for business to do business better”