The tourism sector is one of the world's fastest growing industries and an important source of foreign exchange and employment for many developing countries (UN , 2015) as well as a key source of GDP revenue for developed countries. This growth is indicated by the international tourist arrivals globally, which increased by 4.3% in 2014, reaching a total 1.13 billion from 983 million in 2011. Travel & Tourism’s total contribution in 2014 was USD 7.6 trillion in GDP, 277 million jobs, USD 743 billion in investment and USD 1.5 trillion in exports. This contribution represented 9% of GDP, 1 in 11 jobs, 5% of investment and 6% of exports. Furthermore, long term prospects are even more positive with annual growth forecast to be beyond 4% between 2010 and 2030 (WTTC, 2014; UNWTO, 2015).
Being an energy intensive sector, the tourism industry is under pressure to reduce its greenhouse gas emissions (The European Environment Agency reported that tourism is responsible for 5-7% of total emissions in Europe) and is slowly responding to the task with the implementation of energy efficiency initiatives and the adoption of RE (Dalton, et al., 2008). The realization of the negative effects of tourism led to the concept of sustainable tourism (Michalena & Tripanagnostopoulos, 2010). Sustainable tourism has been defined as “Tourism which can sustain local economies without damaging the environment on which it depends” (Quoted in (Butler, 1999)).
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Since 1999, the concept of sustainable tourism development has become widely accepted as a desirable and politically appropriate approach to tourism development (Sharpley, 2003). The tourism industry is encouraged to support sustainable tourism by assisting corporations and hotels to decrease the environmental impacts of their operations (Zolfani, et al., 2015), as well as motivating them to adopt sustainable strategies in order to: improve profits, create greater brand recognition, enhance reputation, increase market share, increase employee loyalty and cost savings, contribute to the well-being of the community and to meet regulations with governmental entities (RETI, 2015). This can be done by support of governments and other tourism authorities by continuously reviewing the energy policy to ensure long- term reliability and security of energy supply and also undertaking efforts to ensure the sustainability of energy resources (Mohamed & Lee, 2006) (cited by (Zolfani, et al., 2015)).
One direction towards a sustainable tourism future is the use of RE. To do so, the Renewable Energy in Tourism Initiative (RETI) that has been formed to facilitate the expansion of sustainable energy practices among members of the travel and tourism industry. Similarly, other organizations are aimed at recognizing best practice in sustainable tourism within the industry globally, based upon the principles of environmentally friendly operations; such as Green Hotelier1, EcoGreenHotel, 2 Considerate Hoteliers3 and
Global Sustainable Tourism Council4.
Among the different tourism sectors, hotels are large consumers of power and water using approximately 50% more energy than a similar sized residential building despite having only 55% occupancy rates on average. For example, in the UK, the hospitality sector spends over GBP 1 billion every year on energy and is responsible for producing 3.5 million tonnes of carbon emissions per year (Green Hotelier, 2009). Therefore, the hotel sector was no exception to the organizations that adopted environmental dimensions as part of their strategic vision.
3.6 Conclusion
In conclusion, Dubai’s energy challenges can be summarized into two key challenges: energy security and GHG emissions. These are similar to the global and regional energy challenges described in Chapter 2.
1 http://www.greenhotelier.org/ 2 https://www.ecogreenhotel.com/ 3 http://www.consideratehoteliers.com/
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Dubai’s energy security challenges are primarily driven by its inability to source gas at competitive prices as it used to historically. The growth in the economy and power demand compounded the energy challenge, especially that Dubai’s main source of fuel is gas. As a response to these challenges Dubai established its energy policy arm, the Dubai Supreme Council of Energy, to map out Dubai’s energy strategy. As a result, the Dubai Integrated Energy Strategy 2030 was launched with the aim of diversifying Dubai’s energy sources and improve energy efficiency and raise electricity prices to reflect rising energy costs. The primary alternative energy choices for Dubai are coal, nuclear and RE, with its RE target set at 7% of Dubai’s total power output by 2020 and 15% by 2030.
To implement Dubai’s Integrated Energy Strategy 2030 Dubai transitioned from its traditional energy business model to the current energy business model which incorporates the private sector from the supply side of energy through partnering with IPPs. The main advantages of this energy business model will benefit the supply side of the energy production through bringing in know-how and financial capabilities. However, as Dubai introduces solar energy, a new burden will be imposed on the government of Dubai to cover the cost of generating power from solar, especially that there are no additional tariffs on the consumers to pay a premium to cover such cost. This led to the review of Dubai’s economy to discover which of its sectors could pay for that premium.
Looking at Dubai’s economy, the trade and tourism sector appeared as the largest contributor to Dubai’s economic growth and one of the fastest growing industries in Dubai, as well as already incorporating sustainability into its long term strategy. The tourism sector in Dubai has launched sustainability initiatives such as the Green Tourism Award to recognize hotels that adopt environmentally friendly measures. These initiatives are encouraged by the government because they support the UAE Green Economy Initiative and the Green Economy Partnership that lays the country’s strategy towards a green economy and public-private partnerships aimed to encourage public and private sectors to adopt environmentally sustainable practices. In view of that, this study choses the tourism sector in Dubai as a candidate to pay for the solar premium. Given Dubai is home to many of the world renowned global hotel chains and the concept of sustainable tourism development has become widely accepted and desirable, this study looks specifically to Dubai’s hotels to explore their willingness to pay for the solar premium.
Given what was learned from the BM literature review in Chapter 2 (Section 2.9) that having a value proposition is an integral part of the development of any business model, and given that WTP for RE literature review in Chapter 2 (Section 2.9.5) indicated a positive WTP for green energy does exist, this
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study will explore the possibility of Dubai’s hotels to pay for a solar premium. In the same way that the DTCM promotes Dubai’s hotels to participate in the Green Tourism Award by offering awards and public relations, further investigation is conducted in Chapter 7 on what may incentivize Dubai’s Hotels to pay for the solar premium.
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