Most hotels have incorporated sustainability activities in their operations, particularly reducing energy consumption or measuring carbon emissions. Two activities that either reduce operational costs or increase revenues (by providing carbon footprint data to meeting planners and corporate customers who request this information in RFPs). However, as sustainability is becoming part of the mainstream, is it still possible to gain a competitive advantage through sustainability?
The answer is Yes but by moving beyond simple compliance and cost reduction activities. The Economist recently reported in a report entitled ‘New Business Models. Shared value in the 21st century’ that some organisations are considering the value created not just for shareholders but for all stakeholders and society at large.
Almost half of corporate managers told the Economist that they have reviewed the case for shared value and implemented changes to incorporate it into their existing business models or have drawn up new strategies with a specific focus on shared value.
In the hotel industry, creating shared value may be achieved for example by creating a training program for non-English speaking employees to learn English: it improves the lives of the employees, the service that hotel guests receive, and the likelihood that these guests will return (and therefore increasing the hotel’s revenues).
Organisations recognise that they cannot only look at shareholder value in isolation from the value it is generating for other stakeholders. They also realise that there is a strong causal link between companies’ financial performance over a 5 to 10 year timeframe and their current commitment to improving their environmental, social and governance performance.
The Economist survey identified that:
- 66% of managers say there is a strong causal link between sustainability and long term financial performance
- Managers now understand the wider importance of sustainability
- Managers in developing markets (where Western hotel chains are expanding rapidly) indicate a strengthening commitment to sustainability, because of:
- greater regulations,
- local economies’ dependence on natural resources (which makes local population more aware of sustainability issues), and
- traditional values of conservation.
- Two thirds of companies are currently reviewing their sustainability strategies
- The top 3 sustainability priorities over the next 5 to 10 years are:
- Energy efficiency,
- Improving health and safety, and
- Offering environmentally sound products and services.
Hotel companies should embrace shared value creation and think of ways they can do this at their properties.