This article studies the integration of circular economy (CE) principles within the tourism sector, in the broader context of the green transition. The circular economy emphasizes resource efficiency, waste minimization, and product lifecycle extension, while the green transition prioritizes low-carbon strategies, renewable energy, and sustainable mobility. Together, these frameworks present significant opportunities for innovation, resilience, and sustainability in tourism. The article explores how CE has evolved from theory into practice, leading to cost savings, reduced environmental impact, and new market opportunities, especially in sectors like tourism. The transition toward CE requires collaboration among policymakers, businesses, and consumers, supported by legislation and public education. A mixed-methods approach, integrating both qualitative and quantitative techniques was used to understand the level of innovation maturity and CE adoption among tourism-focused small and medium-sized enterprises. Stakeholder engagement is shown to be crucial in fostering demand for circular products and encouraging regulatory incentives. Case studies highlight the environmental benefits and business innovations arising from CE implementation. Through participatory workshops and entrepreneurial discovery processes, ILCA mobilized SMEs as active agents of the green transition. However, challenges remain, including economic and technological barriers and the need for systemic change. The paper concludes that embracing CE within tourism can drive long-term sustainability, support climate goals, and promote social equity. As the industry recovers from global disruptions, embedding CE principles is essential to creating a regenerative, low-impact tourism model aligned with the goals of sustainable development.