To be regenerative in nature, it is not only important to offer a sustainable service or product, but also to have an organizational structure that fits regenerative values, even if this is partly at the expense of profitability. Several pioneers within the tourism sector show that there are organizational structures that fit perfectly with a sustainable or regenerative mission. Read here about two alternative forms of governance that can support a company’s idealistic mission: the cooperative and steward ownership.
With regenerative tourism, the priority is not making a profit or growing tourism, but rather making a (net) positive impact on the environment. Sustainable values that give something back to nature and the community through tourism are central. Growth in the number of visitors and expenditure is therefore no longer the primary goal. Instead, tourism is used as a means to achieve other goals that are important for the environment or to the local community. The starting point is the needs of the destination and the people who live there. What does this place need? And how can tourism contribute to this? This is a different way of thinking about tourism that also requires a change in the way tourism companies organize themselves.
There are countless examples of organizations and companies within the tourism sector that started with great ideals where a positive contribution was paramount. However, these ideals often have to yield to the financial interests of shareholders in the long run. As a starting company, it seems almost impossible to avoid this. If you want to grow, you need investors. But it is precisely because of these investors that entrepreneurs cannot always hold on to their ideals as this does not necessarily generate the most profit immediately. How to ensure that values other than financial growth can be prioritized and be financially profitable at the same time? In other words: how can a company ensure that the organizational model is in line with regenerative principles?
The cooperative in itself is not a new organizational form and has been used for years in various sectors, but is currently undergoing a revival in the context of sustainability. The first officially registered co-operatives date back to 1844 when the Rochdale principles for co-operatives were drawn up in the United Kingdom. A cooperative is described as an independent organizational form in which different people have come together to achieve economic, social, and cultural ambitions. Initially, during the Industrial Revolution, cooperatives were often started to protect the rights of workers. Later we mainly saw cooperatives in the agricultural & horticultural sector to represent the interests of farmers and to strengthen their market position. Since the 1960s and 1970s, we have seen more and more cooperatives emerging with a social goal, especially in the field of food consumption. Cooperatives were started to, for example, make organic food accessible and affordable (Berkeley Economic Review). Nowadays we still see many cooperatives with a social purpose, but in a broader sense. For example, we see that companies start delivering a new product or service, but want to be able to continue to do so in line with the social mission without being dependent on external investors.
Important characteristics of a cooperative are that there is joint ownership (the cooperative is owned by all individual members), democratic management (each member has a vote), and focus on the interests of the members (instead of external investors) (Research Handbook on Sustainable Co-Operative Enterprise). Collectively, these qualities ensure a focus on shared values rather than maximizing individual profit. In addition, it also ensures transparency in decision-making because all members can check whether the cooperative is acting on its goals. For these reasons, it is seen as an organizational form that has the potential to contribute to social and sustainable missions. A cooperative is not dependent on external investors who can influence the direction of the company, because investors are also members of the cooperative. This reduces the risk of falling into revenue models that may (possibly) generate more money, but are not in line with the core values of the company and its members.
Cooperatives in tourism: Fairbnb and European Sleeper
A good example of a company that has chosen this way of working is the company Fairbnb, which officially started as a cooperative in Italy in 2018 to provide a fair counterpart to the Airbnb platform. While Airbnb, with its current policy, seems to have long deviated from the original idea of home-sharing and benefitting residents, Fairbnb wants to focus on this again. The importance of the destination and residents comes first by, among other things, working closely with local authorities. The policy is adapted to local circumstances, which means that in some places there is a ‘one-host, one-house’ policy, which means that rentals remain small-scale and local. Furthermore, Fairbnb ensures a fair income for hosts by not charging a (high) commission, and part of the income is invested in local projects – chosen by the local community. The cooperative model that has been chosen, with members who support these principles, guarantees that Fairbnb cannot take a different course in the future and puts profit maximization first.
The Belgian-Dutch company European Sleeper, which was founded in 2021 to revive night trains in Europe, has also opted for the cooperative as an organizational form. The establishment of the cooperative is a response to the social support that already seemed to exist at that time around the revival of the European night train network among a broad community. With a cooperative as an organizational form, various people from this community could become partial owners of the company and therefore also make an active contribution to the start of a sustainable initiative. At European Sleeper profit optimization is not the highest goal, but the social mission comes first as well. The cooperative as an organizational form was therefore a logical choice, with the members also (partly) making the investment for this initiative possible: in the first financing round of European Sleeper, all shares were sold within 15 minutes. The first night trains are now running to Berlin and Prague and Barcelona are also planned as destinations in the coming years.
Steward ownership is another alternative organizational form in which the accumulation of capital is not the priority. This organizational form is also sometimes called a ‘capitalism hack’. Steward ownership has been practiced for more than a century, but has only recently been given this official name and not much is known about it yet. The first company to apply the principles of steward ownership was the German company Zeiss, which established several principles in 1889 to safeguard the future course of the company, even after the death of Carl Zeiss. Profits could be reinvested in the company or donated to further general economic, scientific, and charitable interests and institutions.
In recent years, the model of steward ownership has been on the rise among impact-driven entrepreneurs who want to safeguard their sustainable and/or social intentions through steward ownership. The most important principle of the steward ownership model is that profit rights and voting rights are separated, this is also called self-determination. This means that investors do not get a say in the direction of the company – they have no voice in it. The direction of the company is determined by the ‘stewards’, the people who are involved in the organization but have no intrinsic interest in increasing profits. This way the different interests cannot become intertwined. A second important principle is ‘purpose-orientation’. Founders and investors are compensated fairly, but in principle, profits are reinvested in the company or donated in line with the company’s mission (Purpose). With steward ownership, profit is no longer a goal in itself, but rather a means to make a positive impact. This breaks the system in which shareholders are always the most important stakeholders in the end. This model could also fit well within the sustainable transition in tourism, where tourism is increasingly seen as a means to make a positive impact on the environment, rather than being an end in itself.
Steward Ownership in Tourism: Time to Momo
An example from the tourism sector that has embraced the steward ownership model is the Dutch start-up Moonback, which merged with Time to Momo last year. This platform is an alternative booking site for Booking.com, a company that now seems to be primarily interested in making as much profit as possible at the expense of entrepreneurs and the experience of travelers. Because Booking is the only (major) player, the sector has become dependent, and so Booking can charge increasingly higher prices and commissions. As a counterpart, Moonback was started (now Time to Momo), a platform where you can book accommodations while all providers pay the same low commission. This way, hotels and other accommodations receive a fair price for what they offer. As a traveller, you will also not be overwhelmed on the Time to Momo website with messages aimed at getting you to book as quickly as possible, such as ‘only one room left for this price’ or ‘only 16% of all accommodation available on these dates’. Time to Momo not only ensures a fairer playing field but also a better experience for the traveler. To prevent Moonback/Time to Momo from undergoing the same fate as a platform such as Booking, the steward ownership model was chosen. This prevents money from becoming the mission again in the future instead of the other way around.
Cooperative or steward ownership?
In a cooperative, there is shared ownership and a shared interest. This can fit in well with the regenerative principle in which the (local) community and its interests come first. The disadvantage of a cooperative may be that, unlike steward ownership, voting rights and profit rights are not separated. In a cooperative, it is assumed that members vote in the interests of the stated ideals and that profit is not the highest goal. However, this is not excluded. Members of a cooperative are paid out profits and in theory, they can still jointly decide that they consider profit more important than the original mission. With steward ownership, this is impossible because these rights are completely separated from each other. An advantage of a cooperative, on the other hand, is that a group of people with different expertise can work towards a common interest and can also provide (part of) the financing. An additional disadvantage may be that in some cases decision-making can be slow due to a large number of members.
With steward ownership, profit rights, and voting rights are separated, so profit always serves the mission and is not a goal in itself. This fits well with the principle of regenerative tourism, which makes tourism a means and not an end in itself. A disadvantage of steward ownership is that little is known about it, making it a relatively complicated model to set up. Moonback/Time to Momo, in collaboration with We Are Stewards, has now put all kinds of information about this online. Time to Momo has also made its legal documentation public so that it becomes easier for other organizations to choose this organizational form as well. An additional advantage of steward-owned companies is that they have a greater chance of survival in the long term and also perform better, but at the same time, they often grow more slowly (at the beginning).
Both forms of organizing have certain advantages that are consistent with regenerative practices, where the pursuit of a positive contribution to society is paramount. But both the cooperative, as well as the steward ownership model, have aspects to take into account when choosing a suitable organizational form. Although both forms have advantages and disadvantages, both organizational forms can contribute to a more sustainable and regenerative organization within the tourism sector. Which form fits best ultimately depends on the context and what goals are set.
Disclaimer: This article contains an affiliate link for Fairbnb. This does not change the content of the article. I always write the article first and then see if one of the companies I already support has an affiliate program. In this way, it may provide a small financial compensation for the (unpaid) time I put into writing these types of articles.