Techno-Economic Evaluation of Sustainability Innovations in a Tourism SME: A Process-Tracing Study

Abstract

In response to growing pressures for sustainability in tourism, this paper examines the techno-economic evaluation of green innovations in small and medium-sized tourism enterprises (SMEs). Focusing on a single case study of a hotel in Greece, the research investigates how and why specific sustainability interventions were implemented and assesses their operational and economic impacts. The study adopts an interpretivist approach, combining process tracing with thematic analysis. The analysis is guided by innovation diffusion theory, supported by organizational learning perspectives, to explain the stepwise adoption of sustainability practices and the internal adaptation processes that enabled them. The techno-economic evaluation draws on quantitative indicators and qualitative assessments of perceived benefits and implementation challenges, offering a broader view of value beyond purely financial metrics. Data were collected through semi-structured interviews, on-site observations, and internal documentation. The findings reveal a gradual, non-linear path to innovation, shaped by adoption dynamics and organizational learning, reinforced by leadership commitment, contextual adaptation, supply chain decisions, and external incentives. Key interventions, including solar energy adoption, composting, and the formation of zero-waste partnerships, resulted in measurable reductions in energy use and landfill waste, along with improvements in guest satisfaction, operational efficiency, and local collaboration. Although it is subject to limitations typical of single-case designs, the study demonstrates how even modest sustainability efforts, when integrated into daily operations, can generate multiple types of outcomes (economic, environmental, and operational). The paper offers practical implications for tourism SMEs and policymakers and formulates propositions for future testing on sustainable innovation in the tourism sector.

1. Introduction

The tourism sector is facing increasing pressure to operate sustainably in response to contemporary environmental challenges and stakeholder expectations, including customers, regulators, and local communities (Graci, 2020; Hardy & Pearson, 2018; Roxas et al., 2020; Singal, 2014). Growing ecological concerns and related policies have compelled tourism and hospitality businesses to adopt green innovations that minimize environmental impact and promote sustainability (Gürlek & Koseoglu, 2021; Satta et al., 2019; Sun et al., 2022). These innovations can lead to benefits such as resource savings, lower costs, and improved competitiveness, while also meeting customer demand for environmentally responsible services (Gürlek & Koseoglu, 2021; Kuo et al., 2022; López-Gamero et al., 2023; Robaina & Madaleno, 2019).

However, despite their potential, sustainable interventions often come with uncertainties, particularly regarding financial outcomes (González & León, 2001). Many tourism organizations, especially smaller ones and those in financial distress, are reluctant to adopt green innovations due to high initial costs, long payback periods, and unclear financial returns (Blanco et al., 2009; Chountalas et al., 2024; González & León, 2001; Singal, 2014). As a result, green investments are frequently viewed as risky; while they may enhance a business’s environmental profile, the economic benefits are not always immediately evident (L. Li et al., 2024). Additionally, firms are expected to balance their environmental objectives with economic realities, creating a need for solid understanding of whether, and under what conditions, sustainability innovations can be both environmentally and economically beneficial (Bodhanwala & Bodhanwala, 2021; Sakshi et al., 2020).

Previous studies have primarily focused on the drivers of environmental adoption (Best & Thapa, 2013; Carasuk et al., 2016; Islam et al., 2020; Tzschentke et al., 2008) or the measurable outcomes of such practices, such as economic indicators or environmental performance (Bodhanwala & Bodhanwala, 2021; Buallay et al., 2022; Elshaer et al., 2023; Nesticò & Maselli, 2020; Sakshi et al., 2020). Very few have examined the complete path from decision-making to implementation and outcomes through a qualitative lens (Montano et al., 2024; Suno Wu et al., 2025). The field remains fragmented, with a variety of theoretical approaches and methodologies, indicating a need for further investigation and knowledge integration (Satta et al., 2019). Notably, there is a lack of in-depth case studies that explore how and why tourism businesses choose to implement specific sustainability innovations, how these are implemented over time, and how they translate into operational and economic results, including both measurable indicators (e.g., energy use, occupancy rates, utility savings) and non-monetary effects (e.g., guest perceptions, internal efficiency). Emerging approaches, such as process tracing, are being proposed to study complex interventions in tourism, offering a way to connect actions to outcomes through context-sensitive causal mechanisms (Montano et al., 2024). These methods help clarify how decisions translate into implementation and impact, an area still underexplored in tourism sustainability research.

This study contributes to this topic by providing an in-depth case study of how one small tourism business (a hotel) designed and implemented sustainability innovations and what effects these actions produced. Combining process tracing with qualitative and quantitative evaluation, the study reconstructs the innovation pathway, from the initial motivation and decision-making context to implementation and observed outcomes. In doing so, it focuses on sequences of actions and the underlying causal mechanisms linking decisions to results. These include operational changes (e.g., energy and water use, waste reduction, service delivery) and techno-economic impacts (e.g., cost savings, payback period, perceived value).

The core research question of this study is: “How were decisions about sustainability innovations made and implemented in a small tourism business, and what was their techno-economic impact?” Essentially, the study seeks to understand how green innovation decisions were developed and applied, and to assess the value (both measurable and perceived) of the resulting interventions. To interpret this gradual progression, we employ a dual framework: innovation diffusion theory as the primary lens and organizational learning as a supporting lens. The diffusion lens helps explain the sequence and pace of adoption in terms of perceived advantage, compatibility, and complexity (alongside external incentives), while the learning lens clarifies how leadership, routines, and feedback supported adaptation and capability building within the hotel. This framework guides the process-tracing analysis and the techno-economic evaluation, linking observed steps to proposed mechanisms and to value beyond immediate financial returns.

The paper is structured as follows: Section 2 outlines the relevant literature and theoretical background. Section 3 presents the methodology and context of the case study. Section 4 details the findings, including the sustainability innovations adopted, the decision-making environment, and the resulting outcomes. Finally, Section 5 discusses the key results, presents managerial and societal implications, identifies limitations, and proposes directions for future research.

2. Background

This section reviews three dimensions of the study: the nature and implementation of sustainability innovations in tourism, the tools available for evaluating their effectiveness in small and medium-sized tourism enterprises (SMEs), and the theoretical lenses that frame how adoption and organizational adaptation are understood.

2.1. Sustainability Innovations in Tourism

The tourism sector has a significant environmental impact, making the adoption of sustainable practices increasingly essential (Chountalas et al., 2024; Sakshi et al., 2020). Sustainability innovations in tourism involve new ideas, technologies, or practices that aim to reduce negative environmental effects while also providing broader social and economic benefits. In essence, these innovations address sustainability goals across three dimensions (economic, social, and environmental), while enhancing the long-term viability and resilience of the sector (Elkhwesky et al., 2024). Below, we break down the core categories of sustainability innovation in tourism and examine the main drivers and barriers that affect their implementation.

2.1.1. Core Categories of Sustainability Innovations in Tourism

There are several key types of sustainability innovations in tourism. These include energy efficiency measures, circular economy practices, zero-waste initiatives, and green procurement. The primary goal of these innovations is to minimize resource use and emissions and reshape how tourism businesses operate within their communities and supply chains.

Energy efficiency initiatives aim to reduce energy consumption and encourage the use of renewable energy sources within the tourism sector (Pace, 2016; Zografakis et al., 2011). For example, hotels can lower their energy usage by installing energy-efficient lighting and climate control systems, as well as utilizing solar power or other renewable sources (Cingoski & Petrevska, 2018; Karvounidi et al., 2024; Nocca et al., 2023). These measures decrease the business’s environmental impact and help reduce operating costs without sacrificing guest comfort (Bohdanowicz et al., 2001; Cingoski & Petrevska, 2018).

The principles of a circular economy in tourism shift the focus from the traditional linear model of “take–make–dispose” to a system where resources are reused and recycled, thereby minimizing waste (Axhami et al., 2023; Manniche et al., 2021). This approach requires rethinking services and processes so that the waste produced by one system can serve as input for another. A notable example is a food service network that collects used coffee grounds from restaurants and hotels and transforms them into a growing medium for mushrooms, which are then sold back to those same restaurants (Nocca et al., 2023). These collaborative, closed-loop practices help decrease the need for raw materials and energy (Gül et al., 2025; Repáraz & Pérez, 2024). Circular economy models can be applied across various areas, including food and waste management, and the repurposing of old buildings for tourism, ultimately generating environmental, economic, and social value for destinations (Rudan, 2023; Sørensen & Bærenholdt, 2020).

Zero-waste strategies focus on virtually eliminating waste sent to landfills through reduction, reuse, and recycling (Song et al., 2015). The hospitality industry generates significant amounts of waste, with studies indicating that hotels can produce around 2.5 kg of solid waste per guest per night (Juvan et al., 2023). A large portion of this waste (including food, paper, plastic, and glass) can be composted or recycled instead of being discarded (Bux & Amicarelli, 2023; K. Li et al., 2024; Remenyik et al., 2025). Businesses adopting zero-waste practices typically compost organic waste, recycle packaging, eliminate single-use plastics, and encourage reuse (Frleta & Zupan, 2020; Hussain & Soni, 2025). Such practices help reduce waste management costs, protect the environment, and enhance the reputation of tourism businesses as environmentally responsible (Diaz-Farina et al., 2025; Frleta & Zupan, 2020; Menegaki, 2025).

Green procurement involves establishing purchasing policies that prioritize environmentally friendly products and services (Masudin et al., 2022; L. Wang et al., 2024). This may include selecting suppliers with sustainability certifications, sourcing local organic food for hotel restaurants, utilizing low-impact products, and setting environmental standards within contracts (Andyani et al., 2023; Gruchmann et al., 2022). Research suggests that green procurement is becoming a crucial strategy in tourism, allowing the sector to grow while remaining within ecological limits. By focusing on sustainable supply chains, renewable energy, and circular products, tourism businesses can reduce their environmental footprint and enhance both their resilience and competitiveness (SWITCH-Asia, 2025). Furthermore, studies show that tourists increasingly favor environmentally responsible businesses, indicating that green procurement can positively influence customer preferences and improve business performance (Galeazzo et al., 2021; Trišić et al., 2021).

2.1.2. Influencing Factors for Sustainability Innovation in Tourism

Several key factors influence the adoption of sustainability innovations in tourism. These include cost considerations, organizational culture, regulatory conditions, and access to knowledge.

Economic factors present a significant barrier to the adoption of sustainable innovations (Chountalas et al., 2024). Many green technologies and practices involve high upfront and operational costs, which discourage investment, particularly among tourism SMEs (Bressan & Pedrini, 2020; Esquivel et al., 2021; Liu & Cheng, 2018). Limited resources can make it challenging to fund infrastructure upgrades such as solar panels, energy-efficient systems, or in-house recycling (Singh et al., 2024; Tansel et al., 2021). Research consistently shows that financial constraints and a focus on short-term profits are key obstacles (Dibra, 2015; Elkhwesky et al., 2024; Esquivel et al., 2021). Businesses frequently cite cost as the primary reason for not pursuing green initiatives (Cingoski & Petrevska, 2018). Addressing these challenges through incentives, subsidies, or clearer communication of medium- and long-term benefits (like energy savings) is vital for broader acceptance (Araújo & Moreira, 2020; Elkhwesky et al., 2024; Liu & Cheng, 2018; Vallone et al., 2013).

Organizational culture, along with the attitudes of managers, staff, and customers, plays a crucial role in driving or hindering sustainability efforts. Resistance to change is a strong barrier; businesses often prefer to stick with familiar practices and avoid the risks associated with innovation (Najda-Janoszka & Kopera, 2014; Warren et al., 2018). A lack of leadership or a clear vision for sustainability can lead to stagnation (Chountalas et al., 2024). Without defined direction or internal motivation, staff members are less likely to adopt new practices (Esquivel et al., 2021). Additionally, job insecurity or concerns about role changes due to new systems can exacerbate resistance (Avilés-Sacoto et al., 2023). Customers may also push back if changes are misunderstood or perceived as inconvenient (Esawe et al., 2024; Rodríguez Sánchez et al., 2020). Promoting a culture that supports sustainability, through training, awareness, leadership, and inclusive decision-making, can help alleviate these issues (Booyens et al., 2020; Meneses et al., 2024; Santos et al., 2021; Sovani, 2022).

Public policies and regulations can either facilitate or hinder sustainable innovation. Government programs, such as grants, tax incentives, or funding for green investments, can help alleviate financial burdens and encourage adoption (Elkhwesky et al., 2024; Hjalager, 1997). Regulatory frameworks are also significant; rules regarding energy use, plastic reduction, and recycling can motivate businesses to act (Elkhwesky et al., 2024; Liu & Cheng, 2018). However, when policies are unclear or inconsistent (such as when bureaucracy, vague laws, or insufficient support slow progress) they can stifle innovation (Najda-Janoszka & Kopera, 2014; Stanovčić et al., 2018; Warren et al., 2018). Additionally, inadequate protections for innovators may lead to “free-riding”, where others benefit from the marketing advantages of sustainability without contributing effort (Najda-Janoszka & Kopera, 2014). Strong, consistent frameworks, combined with public–private partnerships and local government involvement, are crucial for scaling innovation (Alsahafi et al., 2023; Baiocco et al., 2023; Kernel, 2005).

Access to knowledge and technical skills is essential for implementing and sustaining green innovations. A lack of expertise can prevent businesses from adopting sustainable practices effectively (Jacob et al., 2003; Najda-Janoszka & Kopera, 2014). Staff who are not trained in energy management, recycling, or sustainable operations may fail to utilize installed systems correctly, limiting their efficacy. The absence of a knowledge-sharing culture within many tourism SMEs further hinders progress (Chatzifoti et al., 2025; Najda-Janoszka & Kopera, 2014). Smaller businesses, in particular, may lack access to knowledge resources and support (Bressan & Pedrini, 2020). Training programs focused on sustainable tourism management, workshops on new technologies, peer exchange networks, and partnerships with universities or research institutions can help bridge this gap (Avilés-Sacoto et al., 2023; Baiocco et al., 2023; Panfiluk, 2023; Sovani, 2022).

2.2. Techno-Economic Evaluation in SMEs

Techno-economic evaluation involves a systematic analysis of the costs and benefits associated with an investment or project to assess its overall value and efficiency (Kobos et al., 2020; Z. Wang et al., 2021). This type of evaluation is particularly important for SMEs, especially in the tourism sector, where resources are limited and the margin for error in investment decisions is small (Shields et al., 2024). Tourism SMEs are increasingly expected to embrace green or sustainable innovations, in response to the growing demand for environmentally responsible services (Parsa, 2015). Conducting a thorough assessment of these investments allows businesses to determine if the anticipated benefits are realized and if the associated costs are justified. This section focuses on two key aspects: (a) ex-post cost–benefit approaches for evaluating sustainability-related investments in SMEs, and (b) the use of qualitative data as an alternative to traditional performance indicators in such evaluations.

2.2.1. Ex-Post Cost–Benefit Approaches in SMEs

An ex-post cost–benefit analysis is conducted after a project or investment is completed. Unlike ex-ante assessments, which guide decision-making by estimating future benefits, ex-post evaluations focus on actual results once costs have been incurred (Boardman et al., 1994). For SMEs, this type of review can be especially beneficial. It allows them to compare their expectations with actual outcomes, gain valuable insights, and enhance future investment decisions, particularly when formal evaluations are often limited by budget constraints.

Despite its importance, many SMEs tend to avoid complex financial methods. Research indicates that they often prefer simpler tools like the payback period over more advanced techniques such as Net Present Value (Shields et al., 2024). This emphasis on short-term returns can result in the undervaluation of long-term sustainability investments while exaggerating their upfront costs (Araújo & Moreira, 2020; Chountalas et al., 2024). For instance, a tourism SME investing in solar panels or an energy management system may find it challenging to estimate cost savings in advance, especially given the uncertainty around future energy prices (Shields et al., 2024). However, once the system is operational for a period, an ex-post assessment can track the actual savings on energy bills or operational costs, including any discrepancies from initial projections.

Evidence from the tourism sector shows that green investments can yield measurable benefits after implementation. Studies have reported that hospitality businesses that adopt sustainable practices often reduce energy consumption and lower utility costs (Kholijah, 2024). These savings enhance financial performance and improve profit margins. Initiatives such as switching to LED lighting, implementing smart climate controls, or reusing water can directly decrease expenses. Additionally, waste management practices like recycling or eliminating single-use plastics can help reduce disposal costs (Frleta & Zupan, 2020; Hussain & Soni, 2025; Rodríguez-Antón & Alonso-Almeida, 2019).

Beyond direct savings, ex-post reviews frequently reveal softer benefits. For example, a small hotel that receives an eco-label may subsequently attract new, environmentally conscious guests. The improvements in reputation and customer loyalty are significant, even if they are difficult to quantify in financial terms (Shields et al., 2024).

2.2.2. Qualitative Data as a Substitute for Traditional Indicators

Evaluating sustainability investments in SMEs often requires looking beyond traditional financial indicators. Metrics such as return on investment, net profits, and revenue growth do not always capture the full value of green innovations. Many benefits are indirect or qualitative, including improved environmental performance, enhanced customer satisfaction, stronger branding, and alignment with corporate social responsibility. For instance, reducing CO₂ emissions through solar power represents a significant achievement, but it may not be reflected in standard financial metrics. Nonetheless, these outcomes should be documented and assessed through alternative methods (Shields et al., 2024).

To track these outcomes, tools such as surveys, interviews, and case studies are often employed. In tourism research, evaluations of green initiatives by SMEs typically use mixed methods that combine numerical data with qualitative insights (Johansson et al., 2021). For example, interviews with owners and guests can capture perceptions of impact, challenges faced, and satisfaction levels. Staff feedback may reveal outcomes like increased morale linked to sustainability efforts or identify gaps in training. Case studies facilitate side-by-side comparisons of conditions before and after implementation, such as changes in energy costs or waste management, while also incorporating guest comments regarding environmental initiatives (Kholijah, 2024).

In many cases, qualitative data is not just supplemental; it can replace missing metrics (Patwa, 2024). This is especially true for ex-post evaluations, where quantitative data may be limited or delayed. Researchers often turn to interviews, success stories, or practical examples to help fill these gaps, particularly when benefits develop gradually or affect broader systems like the community or environment (Bressan & Pedrini, 2020; Calisto et al., 2021). When systematically analyzed, through content analysis or structured rating tools, these insights can support robust and objective conclusions.

2.2.3. Concluding Insights on Balancing Tangible and Intangible Outcomes

The two strands of evaluation outlined above each carry limitations when applied in isolation. Ex-post cost–benefit reviews can capture measurable financial effects with some accuracy, but they often fall short in recognizing outcomes that emerge slowly or indirectly, such as changes in brand reputation or staff engagement. On the other hand, qualitative approaches provide access to these less tangible benefits but may lack the precision and comparability of financial metrics, making it harder to translate results into investment decisions.

For this reason, evaluations of sustainability investments in tourism SMEs are most useful when they deliberately combine both dimensions. A sole reliance on short-term financial payback may underestimate the longer-term strategic value of innovations, while an exclusive focus on perceptions and narratives may exaggerate their significance without demonstrating material viability. Balancing tangible indicators, such as cost savings and occupancy rates, with intangible ones, like customer loyalty and community trust, allows a more realistic view of how sustainability initiatives create value under SME constraints.

This balance is particularly important in tourism, where customer experience and reputation weigh as heavily as operational efficiency. For instance, a tourism SME may discover that a recent energy upgrade, while yielding only modest financial returns in its first year, significantly improved guest satisfaction and increased competitiveness in the eco-hospitality market. Framing evaluation in this way positions SMEs to make better-informed decisions, grounded both in measurable performance and in the broader social and reputational effects that influence long-term competitiveness.

2.3. Theoretical Perspectives on Adoption and Learning in Sustainability Innovation

Innovation diffusion theory provides a frame for understanding how sustainability practices are adopted in organizations. It explains adoption in terms of perceived advantage, compatibility with existing routines, and perceived complexity, along with the influence of trialability and observability (Rogers, 2003). Organizational learning offers a complementary perspective that highlights how routines, feedback, and managerial action support adaptation and capability building over time (Argyris & Schön, 1978; Levitt & March, 1988). For SMEs, learning often occurs through practical experience, with straightforward rules and visible leadership playing a crucial role in whether new practices are successfully implemented and expanded.

Applications of these perspectives already exist in tourism and hospitality research. Diffusion theory has been used to study the adoption of sustainability-oriented innovations in hotels and resorts (Horng et al., 2017; Smerecnik & Andersen, 2011) and the diffusion/assimilation of new technologies in hotel operations (Stylos et al., 2021). Organizational learning has been examined as a driver of performance in the hotel sector (Ali et al., 2020) and as a foundation for advancing sustainable tourism practices (Schönherr et al., 2023). Combining these two perspectives provides a clearer link between the conditions of adoption (diffusion) and the internal adaptation processes (learning) that sustain implementation, particularly in SME settings.

3. Methodology

This section outlines the study’s research strategy, case selection, data collection methods, and analytical approach used to examine the innovation’s implementation and impacts.

3.1. Research Strategy

This study adopts an interpretivist paradigm, which views reality as socially constructed and multifaceted. The goal is to understand how participants make sense of their experiences rather than to establish universal laws. In this case, the researcher aims to grasp how individuals interpret the phenomenon under investigation, emphasizing context and subjective meaning. This orientation aligns with qualitative methods and inductive reasoning, which involves developing theory from data (Kivunja & Kuyini, 2017).

The research follows a qualitative single-case study design. Case studies enable researchers to explore phenomena in depth within their real-life contexts without isolating them from their surroundings (Ridder, 2017). As Yin (2014) and Stake (2005) argue, case studies examine a situation holistically, focusing on how and why events occur. Unlike quantitative approaches, case study research does not rely on random sampling or large samples; instead, a single case is purposefully selected for its relevance and potential to provide rich insights (Shaheen et al., 2019). While this approach limits generalizability, it allows for a detailed investigation of the underlying processes and causal mechanisms at play. A well-documented case can reveal patterns and connections that contribute to theory development and refinement (Ridder, 2017).

This study does not aim to achieve broad representativeness. Instead, it provides an in-depth account of causal processes in one carefully selected case. The exploratory orientation of the study allows us to identify mechanisms that may be relevant for other small tourism businesses facing similar challenges and to formulate propositions for future testing based on these mechanisms.

In this case study, we employ process tracing to examine the sequence of events and actions. Process tracing is a within-case method that tracks how specific conditions or interventions lead to observed outcomes over time (Beach & Rohlfing, 2018; Blatter & Haverland, 2014). It is particularly suited here because adoption was not linear but involved pauses, adjustments, and renewed efforts. Process tracing makes it possible to reconstruct these causal pathways, distinguish between enabling and constraining factors, and test whether observed changes followed interventions. The analysis is guided by a dual-lens framework: innovation diffusion theory provides the primary lens for examining how adoption decisions were shaped by factors such as perceived advantage, compatibility, and complexity, while organizational learning offers a complementary view of how leadership, routines, and feedback supported internal adaptation.

This approach complements the interpretive framework. While interpretation focuses on meanings and context, process tracing adds methodological rigor by using triangulated evidence to identify mechanisms and critical junctures. By integrating both methods, this study aims to understand how and why the sustainable practices adopted by a Greek hotel resulted in specific outcomes, linking lived experience with the internal dynamics of change.

3.2. Case Selection

This study focuses on a carefully selected small hotel with approximately 40 rooms located in the Peloponnese region of Greece (the name is withheld to maintain anonymity). The hotel was chosen because it is highly relevant to the research focus. It follows a comprehensive sustainability strategy that includes a zero-waste policy, aiming to divert all waste from landfills through reduction, reuse, and recycling. The hotel has implemented an in-house composting system that converts organic waste, primarily food scraps and garden trimmings, into fertilizer. Additionally, it relies heavily on solar energy, utilizing photovoltaic panels and solar water heaters to meet most of its energy needs, thereby reducing its carbon footprint. The hotel prioritizes local sourcing for supplies and services, collaborating with local farmers, artisans, and small businesses, which strengthens the local economy and decreases transport-related emissions. Overall, the hotel serves as a leading example of sustainable hospitality in the region and offers a model for green tourism practices.

The case was selected using purposive sampling, as it represents an information-rich example relevant to the research question. Since the study explores sustainability practices and their outcomes in the hospitality sector, the hotel meets key criteria: it has adopted and consistently applies innovative practices (such as zero waste, renewable energy, and local sourcing), allowing for a close examination of both processes and impacts. In case study research, cases are typically chosen for their theoretical value or unique features (Stake, 2005; Yin, 2014). This particular case qualifies as critical in terms of sustainable operations, having committed to zero waste more rigorously than most. It functions as a real-world laboratory where internal mechanisms and challenges can be studied in depth. Being a family-owned business also facilitated access to internal data, such as financial records, environmental performance figures, and cost breakdowns, that would be more difficult to obtain elsewhere. The owners’ willingness to cooperate and share information ensured that the study had the depth needed to support credible, well-grounded conclusions.

While this study focuses on a single hotel, the case was chosen deliberately for its theoretical and practical relevance. It represents a critical case of a tourism SME with a comprehensive sustainability strategy, making it suitable for tracing decisions and outcomes in depth. The purpose is not statistical generalization but what Yin (2014) terms analytical generalization, where findings contribute to understanding mechanisms that may also inform similar contexts.

3.3. Data Collection

This study employed a multi-method qualitative approach to gather primary data and ensure the triangulation of findings.

First, eight semi-structured in-depth interviews were conducted with key stakeholders at the hotel. This group included the owners (a father and his daughter), the manager (who is also the daughter’s husband), selected staff from various departments, and two local suppliers. The semi-structured interview format combined consistency with flexibility. A core set of questions ensured that all key topics (such as waste management, energy practices, community partnerships, and economic aspects) were addressed, while also allowing participants the opportunity to share personal insights. The questionnaires used for the semi-structured interviews are presented in Appendix A,

Table A1. Indicative questionnaires for the semi-structured interviews.

Questionnaire for Owners and General Manager

What motivated you to start adopting sustainability practices in the hotel? How did you decide which measures to implement first? What challenges did you face when introducing changes like solar panels or composting? How did you manage the financial risks or uncertainties during this process? What role did external incentives, such as grants or certification, play in your decisions? How did you involve staff in planning or carrying out these changes? Can you describe any leadership actions you took that made the changes easier for the team? How did you monitor whether these practices improved efficiency or reduced costs? In what ways have these changes influenced the hotel’s reputation or guest satisfaction? Looking back, which decisions do you consider most important in making the project work?

Questionnaire for staff

How did you first hear about the sustainability changes at the hotel? What training or instructions did you receive to adapt to new routines? Were there any changes that made your daily work easier or harder? How do you see your role in supporting the hotel’s environmental goals? Did the changes affect how you interact with guests (e.g., explaining new practices)? How did teamwork change when new routines like composting or waste separation were introduced? Did you notice any improvement in working conditions or clarity of responsibilities? What feedback have you heard from guests about these new practices? Have you faced difficulties keeping up with the sustainability routines? If yes, how were they solved? What part of these changes are you personally most proud of?

Questionnaire for local suppliers

How did your cooperation with the hotel begin? What role do you play in supporting its sustainability practices? Did the hotel ask for any specific changes, such as reducing packaging or adjusting deliveries? How has working with the hotel affected your own operations? What challenges, if any, have you faced in meeting their sustainability expectations? Do you think the collaboration benefits your business as well? If yes, in what ways? Do you see this type of partnership as something other SMEs in tourism could follow?

Note: The questions listed above show the kinds of topics explored in the semi-structured interviews. The exact wording and focus varied with each participant’s role and experience, and follow-up questions were often used to look deeper into specific issues as they came up in the conversation.

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The sample was carefully chosen to reflect a range of perspectives: strategic (owners and manager), operational (staff), and external (suppliers). This approach helped capture how sustainability practices are implemented and perceived at different levels of the value chain. In process tracing, interviews served as the main source of process evidence, identifying motives, decisions, and adaptations. They also provided input to the techno-economic evaluation by revealing hidden costs (e.g., staff time for composting) and non-financial benefits (e.g., guest responses). Detailed profiles of the participants are provided in

Table 1. Participant profiles.

ID	Role	Department/Function	Notes
P1	Owner (Father)	Founding/Executive oversight	Co-founder; involved in high-level decisions.
P2	Owner (Daughter)	Operations & Sustainability Lead	Actively manages daily operations and eco-initiatives.
P3	Manager	General Management	Oversees staff coordination and implementation.
P4	Receptionist	Front Desk/Guest Services	Communicates green policies to guests.
P5	Kitchen Assistant	Kitchen/Food Services	Handles organic waste and composting routines.
P6	Housekeeping staff	Housekeeping	Involved in waste sorting and cleaning routines.
P7	Local supplier	Produce Supplier	Provides organic produce to the hotel.
P8	Local supplier	Handcrafted Goods Supplier	Supplies sustainable goods for guest amenities.

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Second, the researchers conducted on-site observations at the hotel, taking field notes during the visit. Non-participant observation provided direct insights into daily operations, including how waste is sorted and composted, the use of solar systems, and the engagement of staff and guests with green initiatives. Process-specific observation protocols were applied (for energy use routines, supplier deliveries, etc.), each noting the setting, actions taken, actors involved, and outcomes. This method also helped capture the hotel’s overall sustainability culture. Observations confirmed interview findings and provided contextual understanding that interviews alone could not offer. They were also used as process-tracing evidence when checking if interventions were followed by observable changes. For the techno-economic evaluation, observations helped assess operational aspects such as workflow efficiency and staff workload.

Third, document analysis was performed to collect secondary data. This included reviewing the hotel’s original investment plan with sustainability features and financial records related to energy and waste, and internal reports. Document analysis followed a systematic process of reviewing and interpreting records as qualitative data. These materials provided both objective information (such as energy or waste reduction figures) and historical context, serving as a method to cross-check claims made in interviews. Documents were critical for establishing causal linkages, since financial records and utility bills could be sequenced alongside interview accounts and observations to test whether claimed interventions produced measurable changes. In techno-economic terms, they supplied the quantitative base for calculating savings, payback periods, and resource reductions.

By combining interviews, observations, and document analysis, the study achieved data triangulation. Comparing evidence from multiple sources reduces bias and enhances the validity of the findings. This triangulation also functioned as an evidence test in process tracing, supporting causal inference. In case study research, triangulation is considered essential for developing a comprehensive understanding of complex phenomena (Ridder, 2017).

Particular care was taken to ensure the quality and credibility of the research, using criteria appropriate for qualitative inquiry, such as credibility, dependability, confirmability, and transferability. To support credibility (ensuring that the findings reflect participants’ actual experiences) data triangulation was coupled with member checking: the owners reviewed and confirmed preliminary findings. For dependability (consistency of results), an audit trail was maintained, including interview transcripts, coding records, and process notes. Confirmability (neutrality of findings) was also ensured through the audit trail and a clear chain of evidence linking conclusions to participant data. Transferability (applicability to other contexts) was facilitated through thick description. Detailed contextual information was provided about the region, the hotel’s size and practices, and the surrounding economic and social environment, allowing readers and future researchers to assess whether the findings may be applicable to similar settings.

3.4. Data Analysis

The data analysis employed three methods: process tracing to map decisions and causal sequences over time, thematic coding to interpret qualitative data, and a structured, evidence-based techno-economic evaluation. The goal was to understand how the case evolved, what influenced it, and how the costs and benefits of the innovation materialized.

3.4.1. Process Tracing

Process tracing was utilized to reconstruct the progression of key decisions and events. This method focuses on identifying the causal mechanisms behind observed outcomes by examining how one step leads to another. It draws on detailed, within-case evidence to explain how and why change occurs (Beach & Rohlfing, 2018; Blatter & Haverland, 2014). The analysis highlighted critical junctures (points where a decision significantly shaped the outcome), making it possible to trace the connections between initial conditions and final outcomes within the organizational context. For instance, the investment decision, the management of early delays and procurement routines, and later cost control were treated as junctures where alternative outcomes were possible, and tracing these points clarified how adoption was sustained.

To establish causal linkages, evidence was ordered chronologically and tested across sources to see whether reported interventions were followed by observable changes. The process began with interview accounts that identified motives or decisions, which were then checked against documentary records for timing and factual confirmation, and finally compared with field notes to see whether practices were actually in place. For example, when staff described the introduction of composting routines, their accounts were compared with internal records of compost bins emptied and notes kept by staff in a shared kitchen logbook on the volume of residual waste bags. Similarly, management’s claim that new procurement rules cut packaging waste was verified through supplier invoices and staff observations of delivery practices. In the case of energy savings, monthly utility bills and the installer’s technical reports on the solar systems were cross-checked with guest comments that mentioned the visible installations. This triangulation served as a simple form of evidence testing, strengthening inference. Process tracing was guided by the dual-lens framework, which directed attention to both adoption conditions and internal adaptation mechanisms.

3.4.2. Thematic Analysis and Coding

Interview transcripts and documents were analyzed thematically using a coding process. Following Braun and Clarke’s (2006) approach, we identified patterns and organized them into five broader themes: motivations for adopting the innovation; barriers and challenges; implementation process; costs and investments; benefits and outcomes. Codes within each theme were developed inductively from the data while being guided by existing research on sustainable innovation in tourism. Coding was supported by MAXQDA 2022 software, which allowed for consistent classification and hierarchical structuring of codes. To enhance reliability, coding was first carried out independently by two researchers and then cross-checked to resolve differences. This approach helped distill meaning from a large volume of qualitative material and facilitated cross-comparison across different data types. Figure 1 shows the hierarchical arrangement of themes and codes, outlining the thematic structure of the study. The coding also supported process tracing by clarifying where actors described motives, outcomes, decisions, or adaptations, which could then be sequenced as part of the causal chain.

3.4.3. Techno-Economic Evaluation

The third part of the analysis involved a techno-economic evaluation of the innovation’s costs and benefits, primarily based on internal financial records, performance metrics, and supporting documentation. While monetary estimates were calculated for direct implementation costs and savings, the assessment also included qualitative and non-financial dimensions.

Specifically, the criteria went beyond cost–benefit, covering three levels: financial returns (such as energy and water savings), operational changes (such as occupancy, staff training, and supplier relations), and experiential and reputational outcomes (such as customer satisfaction and certification). Any additional resource requirements, such as coordination efforts, were considered as “costs”, while positive impacts, including operational improvements, customer satisfaction gains, and environmental benefits, were treated as “benefits”, regardless of whether they had an immediate monetary equivalent. Quantitative indicators (e.g., energy use per overnight, annual utility costs, waste volume) were used where available but were complemented by qualitative judgments, particularly when evaluating guest perceptions, internal efficiencies, and reputational outcomes. The evaluation was also interpreted through the dual-lens framework to connect adoption outcomes with the organizational processes that sustained them. This mixed-method evaluation was integrated into the findings to provide a more comprehensive understanding of value creation and to determine whether the observed benefits justified the investment from both a financial and operational perspective.

4. Results

This section presents the key results of the case study, including the timeline of implemented innovations, the causal processes that shaped the project’s evolution, and a techno-economic evaluation of the outcomes.

4.1. Timeline of Innovations

This section outlines the timeline of the project’s sustainability innovations, highlighting the main steps taken each year as well as the intermediate stages that support the narrative of process tracing. The interventions progressed gradually between 2018 and 2024, transitioning from a pilot phase to more integrated actions, and ultimately to broad collaborative initiatives. The timeline of the innovations is summarized in

Table 2. Timeline of innovations and key intermediate steps.

Year	Main Intervention (Innovation)	Intermediate Steps/Notes
2018	Installation of solar collectors	Pilot implementation in the main building; staff trained in the operation of new systems.
2019	Launch of composting program	Distribution of compost bins; awareness and training activities on proper organic waste separation.
2020–2021	Adjustments and preparation	Temporary suspension of composting due to COVID-19; supplier changes to reduce waste; improvements in waste collection infrastructure and procedures
2022–2024	Zero waste partnerships	Collaboration with an external zero waste partner; integration into a circular economy network; community awareness initiatives

, with each innovation described in detail in the subsections that follow.

4.1.1. Installation of Solar Collectors (2018)

The project commenced in 2018 with its first innovation: the installation of solar collectors in key facilities. This initiative was introduced as a pilot program aimed at utilizing solar energy to meet part of the hotel’s energy needs. Prior to implementation, a feasibility study and technical preparations were conducted, and staff received training on the use and maintenance of the new systems. The decision reflected diffusion dynamics, as the clear relative advantage of lowering energy costs and the trialability of a small-scale pilot encouraged adoption. Staff training also illustrated early organizational learning, where employees built routines for operating and maintaining the system. The successful operation of the solar collectors during the first year established a positive precedent, demonstrating the benefits of sustainability and laying the groundwork for future initiatives.

4.1.2. Launch of Composting Program (2019)

In 2019, building on the momentum from the energy initiative, the project expanded to include waste management through the launch of a composting program. Organic waste began to be collected separately, with dedicated compost bins placed in selected locations across the facilities. Before the program rolled out, staff underwent training and participated in awareness campaigns to learn how to properly separate organic materials. Initially, composting was implemented on a small scale to assess potential challenges, such as the cleanliness of collected materials and participant acceptance. Throughout 2019, the program was closely monitored, and minor adjustments were made, such as improving collection frequency and resolving technical issues, based on feedback. Here, diffusion factors such as observability and trialability played a role, since staff and guests could directly see the process and test it on a manageable scale. Organizational learning was evident in how feedback was incorporated. Collection schedules were adjusted and routines refined as the program matured. By the end of the year, composting had become a standard practice, significantly reducing the amount of organic waste sent to mixed garbage.

4.1.3. Adjustments and Preparation (2020–2021)

The years 2020–2021 were marked by intermediate steps focused on adaptation and preparation, partially influenced by external circumstances. The COVID-19 pandemic necessitated a temporary suspension or scaling down of some composting activities as operational conditions and priorities shifted. However, this pause was utilized productively: the project team reviewed the results achieved so far and identified areas for improvement. Procedures were revised to optimize waste collection, making it safer and more efficient according to public health guidelines. Additionally, important decisions were made regarding the supply chain to help reduce waste at the source. A new procurement policy was introduced, prioritizing suppliers based on their environmental performance and replacing those that used excessive single-use packaging with vendors offering products in reusable or recyclable containers. This phase highlighted a compatibility challenge in diffusion terms (i.e., the composting system clashed with pandemic constraints), but also revealed strong organizational learning, as leadership reoriented procurement policies and revised routines to keep progress on track. Toward the end of 2021, preparatory work commenced on the next major intervention, exploring potential partnerships with external actors and organizations specializing in zero waste practices, and drafting a preliminary action plan to integrate previous initiatives into a more cohesive strategy.

4.1.4. Zero Waste Partnerships (2022–2024)

Between 2022 and 2024, the project entered its most ambitious phase, marked by formal partnerships aligned with the zero-waste goal. A cooperation agreement was signed with a specialized organization (an NGO) that provided technical expertise and support for implementing circular economy and zero-waste practices. Through this collaboration, the organization joined a broader knowledge-sharing network, which accelerated the adoption of innovative solutions. This expansion was reinforced by diffusion dynamics; observability and legitimacy from being part of a recognized network encouraged adoption. At the same time, organizational learning was visible in the way staff routines, leadership practices, and guest engagement activities were scaled up to sustain the broader strategy. At the outset of the zero-waste initiative, all previous actions, such as composting and supply chain adjustments, were integrated into a unified strategy for comprehensive waste management. This strategy was aligned with the ISO 14001 standard (ISO, 2015) for environmental management, for which the business became certified during this period. Additional measures were introduced to further reduce waste, promoting the reuse of materials and expanding recycling efforts to cover more categories. In 2024, the project also emphasized public engagement by organizing workshops and seminars on zero waste principles, along with events focused on item exchange and repair, all aimed at promoting a culture of sustainability throughout the community. Participation in collective zero-waste actions marked the peak of the project’s evolution, demonstrating how successive innovations from previous years laid the foundation for a comprehensive, collaborative approach to managing energy and waste.

4.2. Causal Links

This study employed the process tracing method to identify the causal mechanisms linking the program’s interventions to their observed outcomes. The objective was to clarify how each step contributed to the final results by following the chain of decisions and actions. Interpreting these mechanisms through the dual-lens framework shows that some turning points were shaped by adoption conditions described in diffusion theory, while others depended on the adaptive capacity emphasized by organizational learning. Evidence was ordered chronologically and cross-checked across interviews, documents, and field notes to test whether interventions were followed by observable changes, making it possible to separate genuine causal steps from coincidental developments. Causal attribution was strengthened by matching outcome shifts to the timing of interventions (for example, improvements in occupancy and guest ratings largely coincided with the visible roll-out of solar panels, composting, and local supplier partnerships) and by checking against other potential explanations, such as broader market trends, which were not reflected in the regional tourism statistics during the same period. The overall mechanism can be summarized as motivation, decision, barriers, implementation, and outcome.

4.2.1. Causal Mechanism

In this case, a single causal mechanism connects all major interventions and their respective impacts. The mechanism begins with the initial motivation provided by the program and concludes with its performance. The key stages and their roles are as follows:

• Motivation (external intervention): A government grant acted as a catalyst for initiating the investment. This reflects a diffusion factor: an external incentive that lowered perceived risk and increased the relative advantage of adoption. Triangulated evidence from interviews with owners, grant documentation, and financial plans confirmed that without this incentive, the hotel likely would not have proceeded due to the associated financial risks. Later, ISO 14001 certification served a similar role, reinforcing adoption by increasing observability and legitimacy in the market.
• Investment decision: Building on this motivation, the hotel made the decision to move forward. Here, the compatibility of solar technology with the hotel’s operations supported adoption, while leadership commitment demonstrates organizational learning through decision-making and capability building. Accounts of the management team’s discussions highlight specific behaviors, such as the owners comparing supplier offers, debating payback times, and framing the investment as a shared long-term goal rather than a short-term expense. Interview accounts of these discussions were consistent with the signed contract records, strengthening confidence that the decision was causally linked to the grant.
• Project assignment and implementation barriers: The next step involved assigning the project to a contractor. During this phase, implementation barriers began to emerge. Bureaucratic requirements caused delays and necessitated adjustments to the original plan, requiring additional managerial effort. Cross-checking manager interviews with correspondence and dated project files confirmed how these delays developed. The manager’s active role was evident: he personally handled licensing paperwork, re-sequenced procurement tasks, and reorganized staff schedules to keep other hotel operations unaffected. These challenges were addressed through organizational learning, as the manager adapted routines and reallocated resources to resolve bottlenecks.
• Implementation and launch: Following the contracting phase, the project transitioned to implementation and was ultimately launched. This stage involved installing the necessary infrastructure and performing initial tests before full-scale operation. Diffusion dynamics are visible here in the trialability of the system and the gradual adjustment period before full adoption. Training sessions show how leadership turned trial operation into a learning process, using mistakes in compost separation or energy monitoring as teaching moments rather than failures. Evidence from observation notes on staff training sessions was compared with technical reports, showing how trial operation gradually became routinized.
• Implementation and operational costs: At this stage, actual costs started to become apparent, differing from the initial budget due to additional expenses and delays. The hotel had to cover its own share beyond the grant, and some cost overruns exerted extra pressure on the project. It was essential to manage spending effectively to maintain the financial viability of the investment. Cost control combined both lenses: diffusion theory explains concerns about economic advantage, while organizational learning highlights the role of financial monitoring routines and staff coordination. Leadership behavior was visible here in the owners’ insistence on weekly budget reviews, renegotiation of supplier terms, and the decision to cut lower-priority expenses to avoid jeopardizing the project. Supplier invoices and budget spreadsheets were checked against interview claims to verify that cost-control actions were indeed implemented.
• Project performance (results): Ultimately, the project produced measurable outcomes, as discussed in Section 4.3. Its performance was evaluated in relation to the original goals and the actual costs incurred. The diffusion lens clarifies why adoption delivered benefits by enhancing relative advantage and observability, while the learning lens explains how routines and feedback sustained these results. Triangulation of utility bills, guest reviews, and staff notes confirmed that performance gains were not only perceived but also measurable. Temporal sequencing further supported attribution. The increase in repeat guests and satisfaction ratings emerged only after visible sustainability practices were in place, while internal documents and field notes showed no other major changes in service model during this period. Context also shaped outcomes. The temporary suspension of composting during COVID created a setback, but it later allowed the hotel to redesign routines with clearer responsibilities and monitoring, resulting in improved performance once the system was restarted. The achievement of the expected results confirmed the value of the intervention, while any deviations were partly attributed to challenges and cost increases experienced during implementation.

Figure 2 illustrates the main stages of the causal mechanism and their roles, as discussed above.

4.2.2. Critical Junctures and Alternative Pathways

The stages described above included key turning points that significantly influenced the final outcome of the project. From a diffusion perspective, the initial decision to invest was crucial, enabled by the perceived advantage created by the grant. From a learning perspective, the way leadership responded to early delays and adjusted procurement routines was equally decisive, preventing the project from stalling.

An alternative scenario could have seen the owners opting not to invest, leaving the grant unused. In that case, there would have been no implementation, resulting in no outcomes to evaluate. Secondly, the assignment phase and the early implementation challenges were also critical turning points. If the barriers that arose, such as a significant delay, had not been overcome, the project could have stalled indefinitely or even been canceled. Here, the learning lens shows that adaptation (through problem-solving, revising processes, and feedback) was what kept momentum alive.

Thirdly, effective cost management during implementation proved to be essential. A different trajectory could have emerged if spending had gotten out of control. In such a case, the project’s performance would have suffered significantly, and the financial strain on the hotel could have been severe enough to threaten the project’s continuation. This again reflects the intersection of the two lenses: diffusion explains the pressure to secure relative advantage, while learning explains the organizational routines and monitoring practices that helped costs stay under control.

Finally, the suspension of composting during COVID-19 represented a contextual juncture. While it initially disrupted waste management routines, leadership used the pause to redesign processes and assign clearer roles. This adaptation turned a setback into a point of improvement, showing how contextual factors shaped decision-making and helped sustain outcomes once operations resumed.

Across these junctures, causal inference was strengthened by sequencing evidence: interview claims were verified against documents and then compared with observational notes. This step-by-step testing reduced the risk of post hoc interpretation and provided firmer ground for identifying why the project stayed on track.

The decisions made at each of these critical moments were essential for keeping the project on track and ensuring its successful completion. None of the alternative pathways materialized, as the hotel took actions that maintained the momentum necessary to achieve the intended results.

4.3. Techno-Economic Evaluation

This section provides an ex-post techno-economic evaluation of the sustainability innovations implemented by the hotel. The analysis examines the financial impacts and the effects on operations, environmental performance, and service quality.

It integrates quantitative data, such as costs, resource usage, and performance metrics, with non-financial benefits, including increased customer satisfaction and stronger community relationships. The evaluation also takes into account the leadership behaviors that sustained implementation, such as strict cost monitoring and prioritization of staff training, and the contextual conditions that influenced these choices, including supply chain disruptions and the temporary slowdown caused by COVID. External incentives, most notably the initial grant and the later ISO 14001 certification, reinforced both the feasibility and the durability of adoption. Rather than treating outcomes only as monetary returns, the evaluation applied criteria that also considered operational improvements, organizational routines, and reputational effects, allowing economic and non-economic value to be assessed together. Additionally, the evaluation considers the challenges associated with implementation, such as investment costs, increased management workload, and demands on resources, including staff time, training, and coordination with partners.

The main findings are summarized in

Table 3. Key techno-economic indicators before and after implementation.

Indicators	Before	After	Change
Financial:
Annual energy cost (€)	21,500	16,600	−23%
Annual water cost (€)	2160	1800	−17%
Environmental:
Energy use per overnight (kWh)	12	8.5	−29%
Water use per overnight (liters)	180	140	−22%
Waste to landfill (tons/year)	9.5	5.1	−46%
Certifications	0	ISO 14001	+1
Operational:
Average occupancy (%)	70%	85%	+15%
Average stay duration (nights/booking)	3.5	4.3	+23%
Staff training in sustainable practices (hours/year)	0	40	+40
Local suppliers	3	7	+4
Experiential:
Customer satisfaction (Booking.com, 1–10)	8.6	9.3	+0.7
Repeat guest rate (estimated %)	15%	25%	+10%
Implementation Costs (€):
Solar and thermal systems	36,000
Composting equipment	3500
Water-saving and LED systems	2200
Staff training	800

, where the “before” values reflect the situation at the hotel prior to the introduction of any sustainability innovations, while the “after” values refer to conditions once the full set of interventions had been implemented. The indicators therefore capture the cumulative effect of the project rather than the impact of a single measure. Table 3 also organizes the indicators into five categories: financial, environmental, operational, experiential, and implementation costs. The subsequent analysis follows this structure.

4.3.1. Implementation and Investment Cost

The necessary sustainability upgrades required targeted investments in infrastructure, equipment, and staff training. The total upfront cost amounted to approximately €42,500, which was evenly split between a government grant and the hotel’s own capital. While this was a significant expense for a small business, it was considered manageable given the expected long-term benefits.

The largest expense, around €36,000, was for the installation of solar panels and solar water heaters. This investment was deemed essential for reducing energy costs and decreasing reliance on conventional energy sources. The next significant expense involved composting and waste management systems, where approximately €3500 was spent on bins, equipment, and minor site adjustments. Additionally, about €2200 was allocated for water-saving devices and LED lighting, which helped lower water consumption and improve energy efficiency. Another €800 was dedicated to staff training. While this amount was modest, it was crucial for ensuring smooth implementation of the new practices and aligning the team with the sustainability goals. The training covered sustainable operations, organic waste handling, and guest interaction under the updated service model. This emphasis on training shows leadership’s decision to invest in technology and staff capabilities, which was essential for embedding the practices into daily routines.

Beyond these initial investments, the shift to sustainable practices introduced some recurring operational costs. However, these costs remained within acceptable limits and included labor for compost management, routine maintenance of the solar system, and tasks related to ISO certification. Although these actions did not deliver immediate financial returns, they strengthened internal systems, improved the hotel’s environmental image, and attracted guests who prioritize sustainability.

4.3.2. Operating Cost Reduction

The sustainability interventions resulted in a significant reduction in the hotel’s annual operating costs, which is crucial for a small business with limited liquidity and narrow profit margins. Energy expenses decreased from €21,500 to €16,600, saving €4900 annually (a 23% reduction). This decline was primarily due to the installation of solar panels, solar water heaters, and the switch to LED lighting. Similarly, water costs dropped from €2160 to €1800, representing a 17% reduction. This was achieved through the implementation of low-flow fixtures, dual-flush toilets, and improved leak monitoring. Altogether, these changes reduced utility costs by approximately €5260 per year. For a 40-room hotel, these are substantial savings. These reductions alleviate financial pressure and decrease dependence on external financing and enhance profit margins. Lower fixed costs also contribute to long-term resilience, especially in the context of rising utility prices or fluctuations in demand.

4.3.3. Environmental Performance

The interventions implemented at the hotel significantly improved its environmental performance, particularly in terms of resource use and waste management. Electricity consumption per overnight stay decreased from 12 kWh to 8.5 kWh, representing a 29% reduction. This improvement is largely attributed to the installation of solar panels and the replacement of conventional lighting with LED lights. Additionally, water usage per overnight stay dropped from 180 L to 140 L, a 22% decline, thanks to the installation of water-saving fixtures and better monitoring practices. These numbers indicate enhanced resource efficiency, which is vital for sustainable operations.

The reduction in landfill waste was even more notable, decreasing from 9.5 tons to 5.1 tons per year, a remarkable 46% decrease. This reduction was achieved by introducing composting for kitchen and garden waste, as well as by transitioning to suppliers that prioritize recyclable or reusable packaging over excessive packaging. Although not tracked with a specific indicator, the use of single-use plastics was also significantly reduced.

This progress in environmental performance was officially recognized through ISO 14001 certification, which confirmed that the hotel adopted a structured environmental management system. While becoming certified involved some expenses, it enhanced compliance, improved the hotel’s market position, and helped establish its identity as an environmentally responsible business. The pursuit of certification was not symbolic; it was strategic, as it signaled credibility to external stakeholders and provided internal discipline for maintaining monitoring routines. The certification also prepared the hotel to meet stricter future regulations, especially regarding waste and energy management.

Furthermore, there were indirect benefits from shifting to local suppliers with better environmental practices, such as sourcing local ingredients and minimizing plastic packaging. This approach contributed to a broader trend of responsible consumption and the development of more circular supply chains.

4.3.4. Operational Improvement

The implementation of sustainability practices resulted in significant improvements in the hotel’s operational performance, particularly in terms of efficiency and service delivery. Room occupancy increased from 70% to 85%, indicating stronger market appeal and better commercial outcomes. This timing matched the visible introduction of solar panels, composting routines, and local supplier partnerships, and booking records compared with regional tourism statistics showed no broader market trend that could otherwise explain the rise. Therefore, this rise likely reflects the added value of the hotel’s sustainability identity, which helped distinguish it in a competitive tourism market. Additionally, the average length of stay grew from 3.5 to 4.3 nights (a 23% increase). This enhanced efficiency by reducing per-guest operating costs, such as housekeeping and room turnover, and increased revenue per booking.

These positive changes were linked to enhancements in internal operations. Staff participated in 40 h of training focused on environmental management and sustainable practices. This training fostered a shared service culture, streamlined daily routines, and clarified each employee’s role in supporting the hotel’s sustainability transition.

Changes in procurement also contributed to these improvements. The number of local suppliers increased from 3 to 7, which improved delivery reliability and reduced packaging waste. Collaborating with nearby producers advanced the hotel’s environmental and social objectives and simplified workflows due to shorter delivery times and greater flexibility in coordination.

4.3.5. Guest Experience and Perceptions

The adoption of sustainable practices has positively impacted how guests experience and perceive the hotel. Average customer satisfaction on Booking.com increased from 8.6 to 9.3 out of 10. Guest reviews during this period frequently mentioned eco-friendly features such as solar energy use and composting, suggesting that the improvements were directly tied to the new practices rather than external factors. While this rise may be influenced by several factors, it likely reflects the broader guest experience shaped by the hotel’s green initiatives. Part of this satisfaction may come from an added sense of authenticity. Guests can observe or participate in practices such as composting, using solar energy, and serving local products. For visitors who value sustainability, this alignment of ideals creates a deeper connection. The hotel becomes more than just a service provider; it transforms into a place whose identity resonates with their personal values. This connection likely strengthens emotional ties to the hotel and helps define a unique hospitality identity. The estimated increase in repeat visits, from 15% to 25%, supports this interpretation. It is important to note that room prices remained stable during the study period, so changes in occupancy and guest satisfaction cannot be attributed to price adjustments.

The positive effects also extend to the hotel’s online reputation. Although these aspects are not fully captured in the main performance metrics of this analysis, the hotel has seen a rise in positive reviews, mentions in sustainability-focused articles in local press, and guest comments highlighting its eco-friendly practices. Such references help build trust with potential guests and shift the hotel’s appeal beyond just price or location, focusing instead on value-based differentiation.

4.3.6. Overall Cost–Benefit Assessment

The overall balance of the sustainability interventions shows that the benefits outweighed the costs, both financially and beyond. The project led to measurable savings in energy and water, improved environmental performance, stronger operational efficiency, and a better guest experience. The total implementation cost was around €42,500, with half of it covered by a government grant. The business contributed roughly €21,250 from its own funds. Additional operating expenses, such as staff training and composting efforts, remained modest and manageable within the hotel’s day-to-day operations.

Based on the annual savings in energy (€4900) and water (€360), the owner’s contribution is expected to pay off in approximately four years. This estimate does not include indirect gains such as higher bookings, improved brand identity, market differentiation, or healthier cash flow. When factoring in non-financial returns (like the ISO certification, stronger local partnerships, and better reputation), the value of the investment extends well beyond standard financial metrics.

In short, the investment justified the company’s decision to integrate sustainability into its core operations. It strengthened the business model both economically and institutionally and gave the hotel a clear advantage in a market that increasingly favors responsible hospitality. Viewed through the dual-lens framework, the sustained benefits reflect both the diffusion dynamics that supported adoption, such as relative advantage and compatibility, and the organizational learning processes that enabled adaptation through leadership, training, and feedback.

5. Conclusions

This section reflects on the key findings of the study, explores their implications for business and society, and outlines the study’s limitations along with directions for future research.

5.1. Discussion of Key Findings

This study demonstrates that implementing sustainability innovations in a small hotel can lead to significant improvements in economic, environmental, and operational areas. The changes were not dramatic at the beginning; instead, they progressed gradually, starting with the installation of solar collectors and evolving into broader collaborations within circular economy networks. This steady approach proved beneficial. Operating costs decreased, reliance on external energy sources diminished, and resource use became more efficient. As a result, the amount of waste sent to landfills was nearly halved. These outcomes are consistent with earlier studies showing that energy efficiency and zero-waste measures in hotels reduce utility expenses and lower disposal costs (Cingoski & Petrevska, 2018; Frleta & Zupan, 2020; Hussain & Soni, 2025). This sequence reflects adoption dynamics described by diffusion theory, where perceived advantages and gradual trialability encouraged the hotel to move step by step rather than all at once.

The benefits went beyond mere numbers. Operational performance improved markedly, with the hotel achieving higher occupancy rates and longer stays per booking. This indicates that sustainability was not just a responsible choice; it also enhanced the hotel’s competitiveness. Internally, workflows became more efficient. Staff received training in new routines, and local suppliers were engaged whenever appropriate. This limited disruptions and ensured consistency in service delivery. These outcomes were tied to concrete leadership actions: setting training as a priority, keeping procurement flexible during delays, and monitoring costs closely. Each of these decisions created space for routines to stabilize, showing how leadership behaviors made adoption workable rather than symbolic. Therefore, the hotel evolved into a more agile and coordinated operation, better equipped to handle the demands of a small establishment. The above findings align with research highlighting that organizational culture and leadership commitment are decisive in overcoming resistance and embedding sustainable practices (Chountalas et al., 2024; Esquivel et al., 2021). These internal adjustments show how organizational learning (through leadership, routines, and feedback) helped translate adoption decisions into lasting operational improvements.

Guest responses were particularly noteworthy. Many visitors noticed the visible changes, such as solar panels, composting efforts, and the use of local products, and responded positively. Customer satisfaction ratings increased, along with the frequency of return visits. It is likely that this positive reception was not solely related to amenities; many guests probably appreciated that the hotel reflected their own values. This alignment builds trust and transforms a hotel stay into a shared experience. Over time, this connection may develop into a subtle yet powerful form of brand loyalty. These results confirm prior evidence that eco-labels, visible green practices, and green procurement positively influence customer perceptions and loyalty (Galeazzo et al., 2021; Shields et al., 2024; Trišić et al., 2021). Here, diffusion theory also helps explain why visible practices (observability) influenced guest perceptions and reinforced adoption.

It is important to emphasize that these outcomes did not occur spontaneously or simply due to new equipment being installed. They were the result of deliberate decisions and coordinated efforts. The initial grant played a crucial role, as it provided the necessary financial support to undertake the project without overwhelming risk. Later, ISO certification served as a reinforcing incentive, adding both credibility in the market and internal discipline through formal monitoring routines. From that point, the hotel management addressed delays, redesigned aspects of the plan, and kept the budget under control. Management remained focused and adaptable at each stage, ensuring progress continued despite challenges. Rather than derailing the project, these challenges became integral to its development. Interestingly, some setbacks proved beneficial. For example, the pause in composting during COVID-19 led to improved processes later on. Choosing suppliers with minimal packaging addressed waste at its origin, while collaborating with a zero-waste partner offered both structure and technical support. Each new phase built on previous experiences. This adaptability reflects organizational learning in practice: leaders revised routines, absorbed feedback, and built new capabilities that carried the project forward. This trajectory partly contradicts earlier studies that emphasize financial constraints and resistance as dominant barriers in SMEs (Bressan & Pedrini, 2020; Najda-Janoszka & Kopera, 2014), since in this case, external incentives and adaptive leadership appear to have neutralized such obstacles.

This case study shows that sustainability in small tourism businesses can be effectively realized, rather than merely aspirational. The transformation was not flashy; it progressed slowly, with planning and participation from all levels, from hotel staff to local partners. Sequenced and cross-validated evidence strengthens confidence that the observed improvements were causally linked to the interventions rather than incidental trends. The evaluation reflects the scope possible for a small enterprise, yet its structured design still provides meaningful insights into how sustainability innovations deliver both economic and non-economic value. The case highlights how external incentives, contextual constraints, and leadership choices interacted to keep the project on track and turn incremental steps into durable change. Sustainability was not viewed as an external goal but rather integrated into daily practices and decision-making. Ultimately, the hotel did more than just reduce costs and lower emissions; it made lasting changes to its operational practices, strengthened its identity, and established itself in a market increasingly oriented toward responsible tourism. These findings confirm that the gradual adoption of innovations can be understood through diffusion theory, while the durability of those changes relies on organizational learning.

5.2. Managerial and Societal Implications

The findings suggest that small tourism enterprises can integrate sustainability into their operations in ways that are both feasible and beneficial, provided that adoption is staged and rooted in daily practices. Starting with measures that deliver visible savings, then extending to routines such as waste separation and local procurement, appears to create momentum while keeping risks manageable. This stepwise path may be more realistic for SMEs than large-scale investments introduced all at once.

For managers, the case points to practical implications, like assigning clear responsibility for new routines, linking training to daily service tasks, and using simple budget monitoring to track the financial effects of changes. Certification schemes can be useful as frameworks that discipline operations through regular checks and documentation. These measures help small firms absorb setbacks and keep projects on track.

For policymakers and support agencies, the findings show that grants tied to equipment purchase are important but insufficient. Small firms benefit most when funding is complemented by opportunities to connect with peers or local networks. Facilitating supplier–buyer cooperation, for example, by encouraging packaging reduction at the source, can extend the reach of sustainability practices beyond individual firms.

At the community level, the case indicates that SMEs can contribute to local sustainability by engaging nearby producers and hosting modest awareness activities that fit their scale. These initiatives strengthened trust with guests and reinforced local ties without requiring large resources.

These implications should be understood in light of the study’s scope. As they are derived from a single case, they are most relevant for tourism SMEs operating under similar conditions and may not hold universally across all contexts.

5.3. Limitations

This study is based on a single case, which limits the extent to which its findings can be generalized to the broader tourism sector. The insights should be seen as context-bound but potentially transferable, as they highlight causal pathways that may appear in other tourism SMEs under comparable conditions. At the same time, the case cannot capture the diversity that exists across business sizes, types, and regional settings.

Additionally, the evaluation relied on a selected set of indicators, some of which were based on estimates rather than precise measurements. Despite efforts to present results objectively, certain outcomes, such as changes in guest behavior or internal organizational effects, are not easily captured through quantitative tools. The techno-economic evaluation also reflects the scope possible for a small enterprise. It focused on ex-post financial, operational, and reputational outcomes rather than advanced modeling. While this is a limitation compared with full-scale techno-economic analysis, it still provides a structured and practical way of assessing innovations within SME constraints. Furthermore, the analysis covers a time frame of roughly six years, which is a limitation as it does not provide a comprehensive view of the long-term impacts or the resilience of the investment in response to external shocks, such as energy crises, inflationary pressures, or sudden fluctuations in tourism demand.

5.4. Suggestions for Future Research

Future research could take several directions. One possibility is to conduct comparative studies of tourism SMEs across different geographic regions or business models, in order to gain a better understanding of the factors that support or hinder the adoption of sustainable practices. A longer-term, quantitative exploration of the relationship between sustainability and commercial performance could help clarify the consistency of benefits over time and how they develop.

Beyond these broader paths, this study also points to more specific propositions that may guide future testing. The findings suggest that small enterprises do not simply adopt practices in a linear fashion but move through a process shaped by incentives, leadership, and contextual constraints. Examining these mechanisms in different settings could help establish whether they hold more general value.

Firstly, the case indicates that external incentives such as grants or certifications have greater effect when they coincide with visible benefits that reinforce credibility both internally and with guests. A proposition for future work is that the adoption of sustainability in SMEs is more durable when external support is paired with clear and observable outcomes. This could be tested through the lens of innovation diffusion theory, focusing on relative advantage and observability.

Another proposition concerns the role of leadership. The findings show that managers played a direct part in turning delays and setbacks into workable solutions through training, cost monitoring, and routine adjustments. Future research could test whether the adaptive capacity of leaders mediates the relationship between sustainability adoption and operational improvement. This would connect closely with organizational learning theory, where adaptation and feedback are central.

A further line of research lies with guest responses. In this case, visible environmental practices such as solar panels and composting appeared to influence both satisfaction and repeat visits. This suggests a proposition that the visibility of sustainability practices has stronger effects on guest loyalty than less tangible initiatives. Testing this would benefit from linking innovation diffusion theory (observability) with perspectives from consumer behavior research.

Finally, the case shows that disruptions can be turned into opportunities for improved routines. A proposition for future research is that the resilience of sustainability initiatives in small firms depends on whether interruptions are used to redesign practices rather than simply restore them. This would connect organizational learning with resilience theory in tourism studies.