Abstract
This paper shows that the tour operators (TOs) can play a coordinating role in the adoption of environmental management upstream the tourism supply chain. This is done using a dynamic model to analyze the environmental management adoption by hotels in a tourism destination induced by a TO. The TO can create incentives to greening hotels' management through the sharing of an environmental price premium. We show that the extent of green management adoption depends on interest rate, the willingness to pay for environmental quality, and hotels' organizational inertia. We also show how the financial yields from green management are shared between TOs and hotels. Finally, we consider a destination manager that subsidizes hotels' green management. If the destination manager does not take the greening role of TOs into account, she could mistake the true trade-off that she faces between the destination's economic and environmental outcomes for the win-win setting that characterizes the general problem.
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