Tourist willingness to pay for local green hotel certification.

Abstract

This study aims to understand tourists’ willingness to pay a price premium for a local green hotel certification, and is one of only a few in the literature for small-island tourism destinations in emerging economies with their unique and pressing sustainability challenges. In a survey of 535 tourists visiting Gili Trawangan, Indonesia, facing numerous waste management and coral reef conservation issues, the willingness to pay extra for sustainable hotel services was elicited. There were five discrete pricing levels across the surveys that ranged from $0.75 USD to $7.50 USD extra per night. We examined the relationship of the respondents’ payment choice to their socio-demographic attributes and attitudes regarding environmental issues such as climate change. The main findings and practical implications of the study are: (1) to demonstrate the broad willingness to pay for sustainable hotel services. Findings indicate at all price levels (between $0.75 USD and $7.50 USD), more than 50% of tourists are willing to pay. (2) To estimate a lower bound mean willingness to pay per night for a local green hotel certificate of $1.55USD and 1.34€ EUR, and (3) To identify individual attributes that influence willingness to pay. Findings indicate environmental knowledge and preferences play a role. These results can be used generally to incorporate evidence-based practices into the development of a green hotel marketing strategy, and to help define the target market for small-scale green hotel certification. Additionally, we propose a finance strategy for funding local and sustainable initiatives that support the hotel industry and the island’s infrastructure through the premiums collected from the ’Gili Green Award’ certificate.