Integrating sustainability into the tour operators’ supply chain

As intermediaries between tourists and tourism service providers, tour operators bring together a variety of tourism-related services to form a complete holiday package, which is then marketed to customers either directly or through travel agents.

Each package generally consists of accommodation (often including some food provision), transport both to and from the destination, ground transport within the destination, and events or activities such as excursions and social activities.

Because most of the goods and services included in a holiday package are provided by a supply chain of subcontracted companies, organizations and agents, tour operators are not always in direct control of the environmental and social impacts of those products. Yet, consumers increasingly expect the companies they buy from to ensure that their products provide not just quality and value-for-money, but also safeguard environmental and social sustainability.

Companies must take responsibility for ensuring the sustainability of all the inputs that go into their products. For tour operators, who offer products comprised almost entirely of contracted goods and services, this means that effectively implementing sustainability policies requires working closely with suppliers to improve sustainability performance throughout the life cycle of a holiday package.

The benefits of promoting a sustainable supply chain

Working with suppliers to integrate sustainability into the supply chain can result in a number of benefits for tour operators, suppliers, customers and destinations.

From a financial standpoint, improved sustainability can lower costs through increased operating efficiency and reduced waste generation. Sustainability practices can also lead to increased revenue and shareholder value by generating more repeat business and attracting new business from customers who value good environmental and social performance. A strong positive reputation as a company that cares about sustainability issues, coupled with improvements to the quality of the tourism experience provided to clients, can result in increased customer satisfaction and loyalty, strengthened brand value, and enhanced publicity and marketing opportunities.

Good performance and a high quality, sustainable product can also help a tour operator reduce the risk of conflict or problems with governments, staff and local communities, and improve its status as a respected partner in destinations. This may mean enhanced access to key business resources such as capital, the ability to develop products to meet growing market demand, improved relationships with governments, and a motivated and loyal staff.

Steps toward integrating sustainability into the tour operators’ supply chain

Based on the experiences of its members in working with their suppliers to improve the sustainability performance of their supply chains, the Tour Operators’ Initiative has developed a methodology for tour operators seeking to integrate economic, environmental and social sustainability criteria into their choices of service suppliers and their contracts with those suppliers. The key components of this methodology include:

1) Establish a sustainable supply chain policy and management system
For a tour operator, effectively integrating sustainability into its supply chain will require the establishment of a coherent company policy and accompanying management system that set clear targets and actions for economic, environmental and social performance. Basing this system on already existing internal processes will help keep down the costs of implementation and promote integration within a company’s overall operations. Key elements of a successful sustainable supply chain policy include:

- A sustainability action plan for improving the economic, environmental and social sustainability performance of suppliers and integrating the implementation of the policy into existing company management systems;
- A baseline assessment of tourism service suppliers, to assess strengths and weaknesses in their current performance on sustainability, determine priority targets and actions, identify areas for improvement, and generate a baseline against which to measure progress over time and review and modify the sustainable supply chain policy and action plan; and
- A system for monitoring and reporting on progress (as measured against the initial baseline), to ensure that goals have been achieved, identify any potential problems at an early stage, promote transparency, and share results internally and among external stakeholders.

2) Support suppliers in reaching sustainability goals
Tour operators are well-placed to support suppliers in improving their economic, environmental and social performance. As tour operators deal directly with potential customers, they understand their clients’ growing demands for high quality and sustainability. They also often have access to technology and information that smaller suppliers may have difficulty obtaining on their own. Because tour operators deal with a wide range of different suppliers, they can more easily gather information on a variety of best practices and facilitate the sharing of experiences amongst suppliers.
There are a number of ways that tour operators can help enable their suppliers to improve their sustainability performance and meet set sustainability criteria and targets. The appropriate mix of support measures for each company and supplier will depend on data collected during the baseline assessment and the approach that the company has chosen to adopt for implementing its sustainable supply chain strategy. Possible support measures include:

- Raising awareness on sustainability issues amongst suppliers and demonstrating why sustainability performance is important;
- Providing technical support to suppliers on how to improve their sustainability performance, particularly in areas that have been identified as priorities; and
- Offering incentives to sustainable suppliers by recognising and rewarding improvements on key environmental, social and economic issues.

3) Integrate sustainability criteria into suppliers’ contracts
Fully integrating sustainability issues into a tour operator’s business practices will require altering the way purchasing choices are made and suppliers’ contracts are written. Including sustainability criteria in suppliers’ contracts highlights the importance of sustainability issues to the tour operator’s core business and ensures that priority issues are addressed with suppliers from the start. Sustainability criteria can be incorporated into suppliers' contracts to set both minimum performance standards that all suppliers of a particular type must meet and further optional criteria that they are encouraged to achieve. Performance against sustainability criteria will need to be monitored and assessed as part of regular reviews of suppliers and improvements can be rewarded by preferentially contracting suppliers that meet the sustainability criteria.

The Tour Operators’ Initiative (TOI) has published the following tools:

Supply Chain Engagement for Tour Operators. Three steps toward sustainability

Compromiso de los Tour Operadores en la cadena de abastecimento. Tres pasos Hacia la Sostenibilidad

A Practical Guide to Good Practice: Managing Environmental and Social Issues in the Accommodations Sector:

English version

Arabic  version

French  version

Spanish  version

Vietnamese  version

Portuguese version and Annex of local examples

A Practical Guide to Good Practice: Managing Environmental Impacts in the Marine Recreation Sector and Self Assessment Check-list

Guía Práctica de Buenas Prácticas: Manejando Impactos Ambientales en el Sector de la Recreación Marina y Lista de Control Para Autoevaluatión

Guide de Bonnes Pratiques: Gérer les impacts du secteur des loisirs nautiques sur l’environnement