Investing to satisfy ECO-certification criteria : case study

Abstract

Sustainable tourism is what national authorities are aiming for when introducing schemes such as the ECO-certificate. However, amidst the list of criteria needed to be satisfied, there is not any information concerning the financial impact on hotels this implementation would have. Therefore, it was necessary to provide some of this information through this research. Design: The objectives of the research were reached through a feasibility study. This addressed specifically the financial aspect of investing in the ECO-certificate criteria. After choosing some criteria from the list, application of several investment appraisal techniques would have indicated whether the projects were feasible. To enhance this study, several suppliers were contacted in order to obtain different quotations and get a wider perspective. In addition, some stress testing was done, where scenarios were thought of in order to predict possible project turnouts. Findings: The suppliers contacted offered a variety of options through which substantial savings could be made. A range of between 20%-50% savings could be made separately by installing photovoltaic systems, room energy management systems and water saving measures. Several alternative scenarios were brought up to assess the risk of having several variables occurring such as the absence of the Malta Enterprise grant for solar panels. Conclusion: A few of the alternative scenarios promised a higher return than the others, ultimately ending up as being the most attractive investments of all. Moreover, the findings of this research were generally positive and encouraging. Offering high returns, when compared to the cost of capital invested by the hotel, these investment projects are to be considered. Moreover, the payback period of the investments adequately compensates for the returns achievable. Lastly, being in possession of an ECO-certificate might yield revenue increases from higher accommodation rates. Implications/Value: From the results obtained, what can be concluded is that hotels which are looking for good investments, should consider switching their operation to a more sustainable one by undertaking these profitable projects. Moreover, the variety of different options available on the market allows the investor to choose according to his own requirements.