5th Aug 2021
Sustainable travel has been a buzzword for years, and was recently joined by regenerative travel, or travelers helping heal the communities they visit1. But 2021 looks like the year that the travel market could embrace it further thanks to a combination of slow-burning ethical consumerism and COVID-19.
While sustainable and regenerative travel is still in its infancy and growth for hotel stocks, airlines stocks, and cruise stocks in this sector may be slow, if we are interested in long-term trends in the travel industry, this is surely one to watch.
The travel “time out” of the pandemic proved an opportunity for travelers and travel companies to reset their priorities, with a report from the OECD concluding that “the crisis is a once in a lifetime opportunity to move toward fairer, more sustainable and resilient models of tourism development. The pandemic has once again exposed structural shortcomings in the tourism system.”2
There’s a general realization of the need for better collaboration between all the stakeholders involved in travel, including tourism companies, local authorities, tourism businesses, and health agencies. COVID-19 sparked a demand for more responsible travel in general, with higher safety standards, less crowding, more flexibility for booking changes, and greater concern about health at the destination. It also drove a change in mindset among travelers, shifting them away from “price first” which has been the dominant concern for decades.
Tour companies, airlines, hotels and hostels, and local tourism boards are all realizing the economic as well as moral need for a more sustainable, resilient tourism model. Companies are discovering that small changes to their marketing messages, operating policies, and tourism conditions can make a big difference to their popularity, bottom line, and travel stocks performance.
The ethical consumer turns to travel
Ethical consumerism has been rising in general, with consumers increasingly shopping local, eating organic, cutting their meat consumption, buying ethically produced clothing, and replacing driving with public transport or walking and cycling, so it’s not surprising it’s also filtered through to travel. More than 25% of consumers avoid brands that don’t align with their values3, while 36.4% want to reduce carbon emissions4, and 66% of global consumers say more vaguely that they want their daily actions to have a more positive impact on the environment5.
At the same time, we’re seeing a backlash against mass travel, driven largely by millennials who connect travel with personal growth and transformation. Millions of inspirational Instagram posts have grown a yearning for “authenticity,” pushing travelers to seek off the beaten track destinations, unique experiences, and immersive holidays that give them a real taste of the destination. COVID-19 further accelerated awareness of our impact on the planet, especially when people experienced improved air quality and a surge in wildlife during the first lockdown in early 2020.
As a result, in 2021 travelers are more aware of the impact of their purchase choices and want to support the local tourism economy in a sustainable way, forcing travel companies to promote their sustainability qualifications and form meaningful partnerships with local economies. An Airbnb survey concluded “in 2021, travel will continue to be less about tourism and more about living, working and connecting safely away from home.”6
The gap between desire for mass tourism and for sustainable travel is narrowing, at 52% vs 48%7. Last year, Lonely Planet’s annual travel awards reflected the mood by focusing on sustainable travel8, while a survey run by Booking.com reported that over 69% of travelers expect more sustainable travel options and 66% want their visits to support the destination’s economic recovery9. Another study found that 55% of travelers want carbon negative travel, and 60% will book travel with airlines that have a carbon neutral commitment10.
63% of Booking.com’s respondents want to avoid crowded tourist attractions, which will force tour operators to spread travel across more destinations and local tourism boards to promote less-visited sites, thus relieving the pressure on over-touristed cities and rebalancing tourism income more evenly around the world11.
Travel companies are reading the room
In response, travel companies, airlines, tour operators, and hotel managers are all finding ways to signal their eco-friendliness and support for the local community. There’s a new trend towards certification from ethical/sustainable travel boards, like the Future of Tourism Coalition12, which unites six non-profit organizations and has drawn up a set of Guiding Principles for long-term, sustainable growth13. So far, 22 travel companies have signed up14. Hundreds of others are acquiring certification from the Global Sustainable Tourism Council15, and including messaging that emphasizes their support for local economies.
A UK-based report found that while only 49% of travelers are willing to take fewer overseas trips and just 41% would fly less often, they are aware of the impact that tourism has on the global climate and local ecosystem, and seek out more sustainable travel and accommodation options wherever possible to allay their sense of guilt. “They won’t sacrifice their holidays, but they will happily make some small changes when taking them,” says Vicky Smith, founder of sustainable tourist organization Earth Changers. “They won’t abandon their bucket list trips to Bangkok, but they may choose accommodation that eases the guilt of that 12 hour flight.” These sustainable options can be relatively small-scale, like green laundry policies and energy-efficient lighting in hotels, and carbon emission offsetting and recycling food waste for airlines, in order to appease the ethical traveler’s conscience.16 For example, the Marriott hotel chain owns Element hotels, a portfolio of green hotels with features like electric vehicle charging stations, low-flow bathroom fixtures, and sustainable tourist programs like bike rental17. JetBlue leads the way in the airline subsector as the first in the US to become fully carbon neutral for domestic flights, and touts eco-friendly practices like repurposing electronics and fabrics, recycling food waste, and even building a blue potato farm at JFK airport18. United Airlines followed suit, promising carbon neutrality by 2050 and creating the Eco-Skies Alliance program to coordinate purchase of sustainable aviation fuel for a number of airlines19.
Travel experiences are also changing focus, with numerous travel blogs urging people to seek out responsible tour operators and find ways to “live like a local,” including supporting local produce, booking local tour guides, and exploring more of the countryside. Airbnb, for example, has been offering local experiences as well as accommodation for years. As part of more sustainable travel and the response to COVID-19, there’s increased demand for remote, nature-based hotels, individual or small group experiences, and outdoors, socially-distanced adventures. TripAdvisor profiles local tour guides who customize tours for travelers. People want more personalized travel and are willing to pay extra for individualized itineraries. Jane Sun, CEO of the Trip.com Group, notes that in China “there has been a rapid shift from traveling in a big group to small groups,” and McKinsey reports a swift response with new hospitality products.20
Another trend which marries sustainable tourism with the post-covid world is that of more “workcations,” or longer visits that include remote work with discovering a new location and experiencing a new culture more deeply. Ethical travelers feel that they give more back to the local community as long-term visitors, while fewer, longer holidays have a smaller carbon footprint than more short-term visits. Tourist accommodations advertise their WiFi and office space, and destinations like Aruba are offering working visas for digital nomads to enjoy a long workation21.
Sustainable travel could be the key to stable, long-term growth
There are strong signs that sustainable travel could represent the long-term future for the travel sector, helping it recover from COVID-19 and create a far more stable economic model. It connects with the strong trends of ethical consumerism among the general public, the political need to address climate change, and anxiety among local tourism boards and tourist businesses to support a more resilient tourism economy.
The Travel Market Report’s Wellness Travel Outlook predicts that sustainable tourism will increase 25% year on year from 2021, led by adventure travel, wellness treatments, retreats, voluntourism, and animal welfare,22 while a separate report calculates that it will grow by $338.06 billion, or 10% compound annual growth rate (CAGR), between 2019 and 202323. It concludes that the market is still fragmented, with plenty of room for growth, and marks a shifting preference for local and authentic experiences as a major factor driving the trends.
It’s not yet clear how these trends will feed into the broader travel sector, though it’s possible that it could predicate a healthy outlook for travel stocks generally. If so, this could be good news for travel stocks and travel ETFs.
1 “The Essential Travel Forecast Report 2021 (Part 4)” January 4, 2021 https://www.forbes.com/sites/angelinavillaclarke/2021/01/04/the-essential-travel-forecast-report-2021-part-4/?sh=15d328446038
2 “Rebuilding tourism for the future: COVID-19 policy responses and recovery” December 14, 2020 https://read.oecd-ilibrary.org/view/?ref=137_137392-qsvjt75vnh&title=Rebuilding-tourism-for-the-future-COVID-19-policy-response-and-recovery
3 “From Sustainability to Purpose Q&A: Awareness, Communication and Investment” January 20, 2021 https://blog.euromonitor.com/from-sustainability-to-purpose-qa-awareness-communication-and-investment/
4 “From Sustainability to Purpose Q&A: Awareness, Communication and Investment” January 20, 2021 https://blog.euromonitor.com/from-sustainability-to-purpose-qa-awareness-communication-and-investment/
5 “Sustainable Tourism Critical to Recovery in Latin America” June 7, 2021 https://blog.euromonitor.com/sustainable-tourism-critical-to-recovery-in-latin-america/
6 “How Airbnb and Travelers are Redefining Travel in 2021” October 15, 2020 https://news.airbnb.com/2021-travel-trends/
7 “Sustainable Tourism Critical to Recovery in Latin America” June 7, 2021 https://blog.euromonitor.com/sustainable-tourism-critical-to-recovery-in-latin-america/
8 “Sustainability is at the forefront for these Best in Travel 2021 winners” November 18, 2020 https://www.lonelyplanet.com/articles/best-in-travel-2021-sustainability
9 “Smarter, Kinder, Safer: Booking.com Reveals Nine Predictions For The Future of Travel” October 20, 2020 https://globalnews.booking.com/smarter-kinder-safer-bookingcom-reveals-nine-predictions-for-the-future-of-travel/
10 “Spend more, stay longer: The consumer trends driving travel in 2021” March 9, 2021 https://www.phocuswire.com/the-consumer-trends-driving-travel-in-2021
11 “Smarter, Kinder, Safer: Booking.com Reveals Nine Predictions For The Future of Travel” October 20, 2020 https://globalnews.booking.com/smarter-kinder-safer-bookingcom-reveals-nine-predictions-for-the-future-of-travel/
12The Future of Tourism https://www.futureoftourism.org/
13 The Future of Tourism Guiding Principles https://www.futureoftourism.org/guiding-principles
14 “The Essential Travel Forecast Report 2021 (Part 4)” January 4, 2021 https://www.forbes.com/sites/angelinavillaclarke/2021/01/04/the-essential-travel-forecast-report-2021-part-4/?sh=15d328446038
15 Global Sustainable Tourism Council, Members List https://www.gstcouncil.org/membership/member-search/
16 Holiday Trends 2020, April 2020 http://www.bva-bdrc.com/wp-content/uploads/2020/04/Holiday-Trends-2020-Report-FINAL.pdf
17 “Marriott’s Element Brand Unveils Gen 2.5 Design” August 26, 2019 https://www.travelpulse.com/news/hotels-and-resorts/marriotts-element-brand-unveils-gen-25-design.html
18 “JetBlue Becomes First US Airline to Commit to and Achieve Carbon Neutrality” August 13, 2020 https://www.travelpulse.com/news/airlines/jetblue-becomes-first-us-airline-to-commit-to-and-achieve-carbon-neutrality.html
19 “United Airlines Launches Eco-Skies Alliance Program” April 13, 2021 https://www.travelpulse.com/news/airlines/united-airlines-launches-eco-skies-alliance-program.html
20 “NEF Spotlight: Mapping the travel sector’s recovery” January 26, 2021 https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/nef-spotlight-mapping-the-travel-sectors-recovery
21 Aruba: One Happy Workation https://www.aruba.com/us/one-happy-workation
22 Travel Market Report’s Wellness Travel Outlook 2020-2021 https://www.travelmarketreport.com/library/tmr/wellness_2020/index.html?page=1
23 “Research Report: Sustainable Tourism Market (2019-2023)” September 7, 2020 https://www.businesswire.com/news/home/20200907005022/en/Research-Report-Sustainable-Tourism-Market-2019-2023-Need-Of-Organic-Sustainable-Tourism-to-Boost-the-Market-Growth-Technavio