Renovation and Sustainability in Hospitality: When Going Green Increases Market Concentration

Article - Monday, 12 May 2025

Duro, J.A.; Osório, A. and Pérez-Laborda, A. (2025): "Renovation and sustainability in hospitality: The danger of concentration and less competition", Tourisme and Hospitality Research

In this publication in Tourism and Hospitality Research (2025), Juan Antonio Duro, António Osório, and Alejandro Pérez-Laborda (Universitat Rovira i Virgili, ECO-SOS) explore the unintended consequences of sustainability transitions in the hospitality sector. The article, titled "Renovation and sustainability in hospitality: The danger of concentration and less competition", raises a red flag: while green investments are essential for the future of tourism, they could inadvertently deepen market concentration and reduce competition if left unregulated.

Using a stylized game-theoretical model, the authors show that when renovation and sustainability investments are costly, many small accommodation providers may delay action, leading to two troubling outcomes: (i) no firms invest (with environmental damage and reputational decay), or (ii) only the largest firms invest, gaining a durable competitive advantage and the ability to acquire weaker competitors. Over time, this dynamic foster concentrated structures in the industry

The study highlights how sustainability, though desirable, can be a barrier to entry if not matched with inclusive policies. The authors advocate for targeted subsidies as the most effective policy tool to level the playing field and prevent the hollowing out of competition in tourism markets.

This paper not only contributes to the debate on sustainable tourism but also brings attention to a crucial policy dilemma: how to ensure that the path to sustainability does not come with important diversity and competitive cost for the hospitality industry.