Expedia, TUI-Backed Fund Created to Support Sustainable Tourism
by Dawit Habtemariam, Skift
The UnTours Foundation is tired of all the talk and no action when it comes to making tourism sustainable. They hope their new $10 million fund will finally get the tourism industry in action mode. If the fund shows both impact and returns are possible, maybe the financial markets will take sustainable tourism more seriously as a business opportunity — a critical factor for industry-wide change.– Dawit Habtemariam
The UnTours Foundation recently launched a $10 million fund with Expedia Group and TUI Care Foundation to help scale tourism businesses embracing sustainable practices.
Called “Reset Tourism Fund,” the capital will fill a gap in the loan market for sustainable tourism businesses. The UnTours Foundation is a non-profit that invests in social entrepreneurs and community projects and owns travel operator Untours.
“There’s a lot of talk about the buzzwords of sustainable tourism or regenerative tourism or meaningful tourism area, impactful tourism, all these things,” said Jonathan Coleman, co-CEO of UnTours Foundation. “A lot of talk about it, not a lot of finance going to those businesses on the ground that are doing it.”
The fund underscores a Skift megatrend that 2023 will be a year when tourism businesses will take real action on sustainability.
The tourism industry historically hasn’t taken sustainability seriously, a major takeaway from last year’s Skift Sustainable Tourism Summit. “Half of companies, maybe even a little bit more, still hasn’t done anything,” said Intrepid Travel co-founder and Chairman Darrell Wade at the summit. “At the World Travel and Tourism Council, there is a good number of companies talking the right way and a certain number that are really committing, but not enough companies putting rubber on the road.”
Over $540,000 have already been committed to support the fund by the UnTours Foundation and its funding partners. The foundation is seeking more partners to close out the first phase goal of $1 million.
Tourism businesses in any part of the world can apply for between $10,000 to $100,000. Investments take the form of loan interest loans, revenue-based financing, and equity. The capital is available to businesses that successfully integrate climate resiliency and sustainability into their operations, create quality jobs, put racial and gender equality at the forefront and provide inclusive travel experiences.
Loan awardees are selected more so for their impact than their financial returns. “We’re not trying to maximize that financial return because we want to maximize the impact return,” Coleman said. “We’re looking at all the financial stuff, the same way any investor would, but we add in this really rigorous lens of impact.”
To date, the fund has deployed $160,000 of funding to seven tourism-related businesses in the U.S., Mexico and Kenya. Some of these businesses operate in markets where local capital is hard to come by and is too expensive. The fund’s aim is to provide them with more accessible terms.
One of the funded businesses is a safari tour operator called Go Park Safaris in Mombasa, Kenya, that wants to reduce its dependency on fossil fuels. The Untours Foundation is funding their first three hybrid vehicles, said Coleman.
“The local interest rates of those [vehicles] in the market made it really hard to work financially,” he said. “We can accelerate their growth by buying the next vehicle that’s more climate friendly because we can give them more favorable terms than the local market.”