Sustainability in the European Hotel IndustryDemian Hodari
How do different internal organizational factors impact the implementation, measurement and success of a hotel’s environmentally and socially sustainable practices and how are these practices linked to the hotel’s financial performance?
According to the United Nations commission which introduced the concept in the 1980’s, sustainable development is that which “meets the needs of the present without compromising the ability of future generations to meet their own needs” (United Nations, 1987). Since then sustainability has gone from being a social movement to a business issue as regulators, customers, the media and competitors have all pressured organizations to implement practices that promote responsible business operations.
As large consumers of environmental resources, and among the largest employers worldwide, the hotel industry is under intense pressure to demonstrate its commitment to both environmentally and socially sustainable practices. Owners and operators, meanwhile, acknowledge that in order to dedicate resources to such practices they must make ‘good business sense’ and thus be financially sustainable as well. Owners, for example, need to be convinced about that investing resources into sustainability will benefit their hotel and not just any affiliated brand or management company. Operators, therefore, need to provide evidence not only that owners can benefit from enhanced brand value, but also, for example, from direct cost savings and/or revenue generation.
Albeit these pressures and stated commitments, there is little research providing evidence that hotels are successfully implementing sustainable practices (Bohdanowicz, 2005). Those studies that do examine the existence of sustainability-oriented attitudes and initiatives have largely neglected to examine which organizational variables may help in the successful implementation of sustainable practices. That is, which are the contextual factors within organizations such as GM experience and education, corporate standards, and resource allocation policies that drive the implementation and success of sustainable practices? Such information is vital if organizations wish to improve the likelihood of successful implementation of sustainable initiatives.
There is even less research demonstrating that the implementation of such practices can create financial and/or strategic value for individual hotels (Claver-Cortès, et al, 2007). This research gap is largely attributable to the difficulty of quantifying and measuring sustainable practices and their returns (Goldstein and Primlani, 2012). A recent roundtable at Cornell University’s School of Hotel Administration also suggested that one reason that sustainability is still often seen as a marketing effort rather than foray into real innovation may be because the hotel industry does not yet have guidelines that connect sustainability with valuation (Sherwyn, 2012). In other words, advances in sustainable practices in the hotel industry may be hindered due to the lack of evidence about the economic and/or strategic value of their implementation. A key issue, therefore, is how to demonstrate that sustainable practices make business sense by, for example, either saving on costs, generating revenue or creating goodwill with key stakeholders.
May - November 2013
Financial partner: Lausanne Hospitality Consulting