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Climate change - risks and solutions for tour operators
Operators, are you prepared for climate change? Let’s assess risks and solutions.
Climate change is reshaping our world and profoundly affecting the tourism industry. In this article, we'll explore its impacts, and the strategies travel providers can employ to mitigate risks.
Impacts on tourism
The direct effects of climate change are being felt throughout the sector. The following examples highlight the extent of the impact:
1. During Summer 2023, the Mediterranean region, popular among UK tourists, witnessed extreme temperatures exceeding 45°C (113°F). This region faces a triple crisis of climate change, biodiversity loss, and environmental pollution, with temperatures rising at a rate 20% faster than the global average.
2. The ski industry is facing significant challenges and a shortening season. In February 2023, Météo-France recorded the lowest snow levels since 1961. By 2028, around 50 resorts in the French Alps may lack sufficient snow coverage to be viable.
3. Rising temperatures are causing many species to move towards the poles or higher elevations (where possible). This poses significant challenges for eco-tourism, particularly safari operators as animals in nature reserves are often geographically confined and unable to migrate. In sub-Saharan Africa, experts predict that up to 40% of species in national parks could become endangered by 2080.
4. Coastal and marine tourism represents at least 50% of total global tourism. Rising sea-levels are threatening coastal communities, as well as the very assets used by travel companies. 80% of the tourism infrastructure in the Maldives lies 1metre above sea level, but with World Bank estimating sea level rises (from ice melt) reaching up to 1.2metres, the outlook for the islands' future is grave. Meanwhile ocean acidification is destroying coral reefs, and we are currently experiencing the world’s fourth global coral bleaching event.
Extreme weather events result in steep rises in insurance premiums.
Climate change is fuelling an increase in extreme weather events, endangering lives, destroying infrastructure, and leading to a surge in insurance claims.
Insurance expenses for hotels have escalated, increasing from 1% to 2% of Total Travel Value (TTV), with figures reaching as high as 5% in locations such as Florida. It's unsurprising, given that Florida is one of the states facing significant risks. In California many major insurers are no longer willing to issue cover.
Insurance cover will diminish where the risks are deemed highest. Gallagher Insurance reports that of the $360 billion climate-related economic loss in 2022, insurance pay-outs covered only $140 billion – just 39%. Petra Hielkema, chair of Eiopa (the trade body for Europe’s insurers), called for urgent action to stem the rise in losses from natural disasters such as floods and wildfires. In an interview with the Financial Times, she highlighted that collaboration between “companies, member states and broader society,” is essential in addressing the crisis. “All actors need to move,” she counselled.
Better forecasting is essential.
Conducting climate risk analysis helps leading players in the travel ecosystem gain a deeper understanding of the physical and transitional risks facing their destination assets. Sophisticated tools are available, providing industry best-practice climate modelling and impact analysis; these tools can identify different types of risks (acute or chronic) and inform your response to different scenarios.
In some cases, adaptations may be possible.
Ski resorts could migrate to higher altitudes or deploy snow machines to extend the season. However, these solutions are costly and ultimately increase emissions which compounds the problem.
Wealthy destinations may choose to invest vast amounts in infrastructure to protect their cultural heritage; like the €6 billion barrier system to provide flood defences to Venice. But poorer countries often lack resilience and struggle to adapt; fortunately, not all adaptions require billions of pounds of investment. Nature-based solutions are often more cost effective and accessible, for example, mangroves can bolster natural sea defences - waves lose between 13-66% of their height over 100m of mangroves.
Community support and long-term sustainability
The travel industry's crucial advantage lies in its ability to distribute wealth. To protect industry assets, tourism funds must support local ecosystems and communities. Tour operators can play a pivotal role by choosing products that drive positive change whilst investing in rewilding or income diversification programs. Such investments foster community resilience which can also reduce the impact of indirect climate change risks, such as civil unrest stemming from economic uncertainty.
Shifting consumer trends
Soaring temperatures are giving rise to Cool Tourism, where customers swap sun seeking trips for breaks in cooler climates. In July 2023 CaixaBank analysed point of sale data to examine shifts in tourism spending in Spain. Between the peak seasons of 2019 and 2023, tourist spending growth slowed in the country's hottest regions. Tour operators can anticipate emerging trends using climate risk analysis and may choose to promote some destinations in the shoulder seasons.
The growth in ‘Last Chance to See Tourism’ is a destructive cycle that worsens as more people realise that these remarkable destinations may soon become inaccessible. However, the problem is not clear-cut, it’s estimated that one sixth of the global population depends on tourism’s transfer of wealth; boycotting destinations that depend on income from tourism would be destructive. Instead tour operators should support initiatives that focus on wildlife conservation and protection, promoting education and conservation, so that visitors to threatened areas not only bear witness to the destruction but become advocates for change.
Climate conscious consumers are opting for longer stays and fewer trips, often favouring destinations closer to home to minimise flying. Operators must ensure their greenest offerings are widely promoted to encourage others to adopt similar practices.
Regulatory compliance and industry growth
The World Travel & Tourism Council (WTTC) forecasts a 64% increase in the tourism sector over the next 10 years, this growth requires careful management, and tighter regulations. The expansion of the EU-led CSRD (Corporate Sustainability Reporting Directive) is addressing this need. EU businesses meeting criteria such as annual turnover of more than €40 million, will be shortly required to submit non-financial (sustainability) reports alongside their financial accounts. By 2030 every business will be within the scope of the CSRD; fines for non-compliance will be up to 5% of global turnover.
Meeting new regulations can add additional financial strain to travel organisations, as they require both time and investment in staff training or external advisors for successful implementation.
Building resilience for the future
Proactive adaptation to the changing landscape will be critical. Progressive operators are already focusing on building resilience into their businesses, by taking the following steps:
• Conducting climate risk analysis for the key destinations they promote.
• Monitoring consumer trends and preparing to respond to shifting seasons.
• Staying ahead of the regulations.
• Protecting their assets by giving back and supporting communities.
• Measuring and reducing the environmental impact of their business operations and the travel products.
TerraVerde is a sustainability consultancy dedicated to the travel and tourism sectors. Find out more via ABTA's Partner Directory, or visit https://terraverde-solutions.com