Sustainable Hospitality Management: Industry Impact & CSR - HM602

This report critically evaluates the extent to which the hospitality industry contributes to economic, environmental, and social sustainability issues. It analyzes the impacts of these issues on the industry's profitability, considering factors like people's perceptions and inflation rates. The report further explains and evaluates the importance of corporate sustainability management in the hospitality sector, highlighting strategies and initiatives implemented by companies like Marriott and The Savoy Hotels to address environmental concerns, social responsibility, and economic stability. The analysis emphasizes the need for hospitality organizations to adopt sustainable practices to attract customers, preserve natural resources, and maintain long-term profitability.

Sustainable Hospitality
Management

ABSTRACT
Hospitality leaders that are ecologically and socially conscious can increase efficiency and
attract an increasing number of clients looking for environmentally and socially responsible
products and services. Sustainability is important to today's tourists, restaurant patrons, hotel
guests, and shoppers. The success of hospitality organisations is dependent on their ability to
preserve the natural and cultural attractions that draw tourists to their destinations. The report
highlights extent to which the hospitality companies in the industry contributes to each of the
issues, including economic, environment and social. It further evaluates how corporate social
responsibility is important for hospitality companies.

Contents
ABSTRACT....................................................................................................................................2
Contents...........................................................................................................................................3
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Critically evaluation of the extent to which the hospitality industry contributes to each of the
issues............................................................................................................................................1
Analysis related to the impacts that sustainable issues on the hospitality industry’s profitability
.....................................................................................................................................................4
Explain and critically evaluation of importance of corporate sustainability management in the
hospitality industry......................................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Hospitality businesses that use sustainable techniques stand out. In the hotel sector,
sustainability refers to the careful use of a resource so that it is not depleted or harmed (Higgins-
Desbiolles, Moskwa and Wijesinghe, 2019). Hospitality businesses can embrace long-term
business plans with the correct leadership. They want to know that the businesses to whom they
entrust their business are committed to environmentally, socially and culturally responsible
activities. By not overconsuming resources, working to conserve biodiversity, not polluting and
respecting local communities as well as workers, the hospitality business work in harmony with
the environment and be conscious of its social and economic impact. There are numerous
advantages to practising sustainability in the hotel industry. Sustainable projects provide
hospitality firms benefits in addition to drawing more clients and responding appropriately to
what many consider a moral duty in light of the current climate catastrophe. Many hospitality
businesses have implemented sustainability strategies. This deliberate strategy entails infusing
long-term practises into all aspects of the organisation. Sustainability plans can aid in the
enhancement of a company's image.
The report highlight critical evaluation of extent to which hospitality industry makes
contribution in sustainability issues related to social, environmental addition to economic. It also
analyses impacts of sustainability issues on profitability of hospitality industry and importance of
business sustainability management within hospitality industry.
MAIN BODY
Critically evaluation of the extent to which the hospitality industry contributes to each of the
issues
Sustainability issues in context to business is concerned with performing business activities
without putting any negative impact or influence on environment, society and people.
Differential sustainability issues in accordance with hospitality industry are mentioned below:
Economic factors essentially encompass rise in inflation, increase in unemployment rates
and many more related to a specific country. Sustainability can be bifurcated into two main
categories in which they have to be addressed by an organisation. In relevance with hospitality
industry, sustainable issue is rise in inflation rates due to fluctuations caused by national
economies. People all over the globe are troubled with rising inflation which is due to several
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unexpected situations (Guix and Font, 2020). Rise in inflation rates has significantly bring
changes in spending patterns of people. For example, hospitality companies, such as Marriott,
Holiday Inn and many more want to save for future uncertainty and risks. Rising inflation rates
affects returns of all the hotels and other hospitality type of business through pricing, substitution
effects, etc. All these are not sensitive for low to moderate inflation. This has impacted
hospitality industry in a sizeable manner as it has reduced their guests list. Even at the time of
global lockdown, people are suffering from shortage of money. This sustainable issue needs to
be critically evaluated by hospitality organisations. Economy hotels leverage the issue of rising
inflation rate to win price-sensitive travellers as they switch to more affordable stays.
Interestingly, luxury hotel chains, such as Park Hyatt, Rosewood Hotel, Four seasons and so on
that are upper-midscale and upscale hotels also seem to benefit from this inflation, perhaps as an
excuse to raise prices for a less price-sensitive clientele. Moreover, managers of The Savoy
Hotels have brought various affordable packages which help them to attract various visitors as
well as travellers. This practice helps them to generate more revenues. After the corona
pandemic, hotels are opening again, managers of The Savoy Hotels need to grab this opportunity
by bringing appealing packages in order to attract more customers. In order to control inflation
rates, hotels have to create jobs for lowering the inflation rates. As increased jobs have led to a
direct impact on spending patterns of people. It would definitely increase purchasing power of
people.
Environmental force- It is imperative for hospitality organisations to perform sustainable
practices in order to preserve their biodiversity and environmental aspects. In order to attract
more guests, hospitality organisations need a beautiful destination. Hotels, such as park Hyatt
contribute in issues related to environment through making smart purchasing. The hotel can
reduce waste generation by making an effort to only purchase environmentally-friendly products,
and purchasing locally can also reduce the impact on the environment and benefit the
community. Apart from beautiful destinations, guests also appreciate sustainable practices in the
hospitality industry. Major issue that is related to environmental forces and needs to be addressed
by hospitality organisations are preserving biodiversity as well as climate change. Continuous
climate change creates serious problems for human beings as well as animals. These issues can
be further bifurcated into risk of inadequate water supply, flooding and higher temperature. This
aspect has made the future unpredictable and made it difficult to assess the risks as well as
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insurance costs in relation to developments of hotel developments. For the issue, Marriott
contributes by making simple but important choices that promote the diversity of organisms and
the ecosystem that hosts them. In the hospitality company, biodiversity is preserved by
purchasing food from sustainable sources, preferring local products, installing a vegetable garden
and promoting the benefits of sustainable nutrition among your guests, both in terms of health
and taste. Furthermore, in order to solve these issues, managers of Savoy Hotels have signed the
contract called Rio Earth 2021 and also initiated varied projects. They have also make
collaborations with Eco SPIRITS, which is a closed loop system assists in reducing packaging
waste as well as carbon emission by 90% (SUSTAINABILITY INITIATIVES, 2022). They also
use light bulbs which are energy efficient and motion detectors for monitoring lightning as well
as air conditioners. They also used sustainable practices in their kitchen by recycle their food
waste as well as used oil. Managers of The Savoy Hotels have invested their huge resources as
well as efforts in initiating varied programmes regrading waste recycling and reuse. Through this
practices they are impacting sustainable issues regarding environmental factors in a positive
manner to serve their guests and community effectively. Other hospitality companies, for
example, The Inn at Whitewell, contribution towards the environmental force is possible through
protection of forests by choosing wooden furniture from sustainable sources for your hotel,
preferring the most common types of wood, reusing it whenever possible and buying used items.
Social forces- These are concerned with overlooking perception, attitudes and changes of
people which fluctuates at a constant basis with change in market dynamics. Hospitality
companies, for instance, Marriott, Rosewood Hotel and many more support social force
through capital investment, increased tax revenue, tourism-related development and promotion,
charitable contributions and sponsorship. Hotel and lodging businesses are mainstays of their
communities addition to key elements of source of quality jobs. It is imperative for hospitality
organisations to understand social behaviours of people and how they react with changing
market dynamics. People perceptions have been changed in a significant manner due to
emergence of digitalisation era. With the ease of digitalisation, people can easily enhance their
knowledge about changing market dynamics and trends. This is the issue which needs to be
addressed by hospitality establishments (Melissen and Sauer, 2018). It is important for
organisations to understand the emergent use of digitalised practices in order to attract massive
number of customers. For example, The Savoy Hotels have started to use digitalised practices in
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their operations which led them to provide their services in an automated environment. Through
this practice, guests do not have to wait for waiters or hotel staff for their help, they can easily
get comfortable. They also provide facility of ultimate WI-FI to their guests through which they
can download big files. They also provide bandwidth network connections which provides their
guests to overcome speed challenges while downloading something very important. These
practices which are commenced by managers of Savoy Hotels helps them to generate more
revenues. Perceived value results in satisfaction and loyalty of customer. Therefore, the creation
of such value entails examining the value that customers attach to particular products/service that
leads to the charging of prices that they are willing to pay for the products/service involved.
Managers of Rosewood Hotel putting customer first as well as provide superior customer value
as per perceived values from customer point of view. It is imperative for hospitality
establishments to take care of social perceptions and use of digital technology which led them to
introduce sustainable as well as innovative practices. Apart from digital technology, hospitality
organisations need to take care of providing a unique experience to their guests. As visitors
today, do not want excellence in commodities as well as amenities but mostly focused on unique
experience. Guests especially look for adventurous trips, relaxing gateways, retreat cafes and
many more.
Analysis related to the impacts that sustainable issues on the hospitality industry’s profitability
Natural ecosystems can continue to support life and supply resources to meet the
requirements of current and future generations if they are sustainable. It has been analysed that
the hospitality industry places a greater strain on the environment and places a greater demand
on natural resources. In context to the hospitality industry, impacts of sustainable issues on
profitability are as analysed:
People perceptions: Perceptions of people for a brand and industry are their thoughts,
feelings and beliefs about it. Within hospitality industry, the social sustainability issue of people
perception impacts on profitability through increasing customer loyalty and retention, as well as
brand recognition and reputation. It impacts bottom line of the industry and businesses operating
in it (Lombarts, 2018). In case with The Savoy Hotels, say, a consumer may become so
dissatisfied with offerings of the brand that they opt to cancel their membership. For the
company, it may seem like a minor loss of a single subscription, but churn represents
considerably more value. That customer may have developed a perception for upselling or cross-
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selling or might stayed a loyal customer who recommended the goods to their friends.
Furthermore, there are numerous customers who have positive perception and like telling their
friends and family about good fortune of the company that impacts positively on profitability.
For example, they might inform their family about the establishment. In context to Marriott,
perception of people impacts positively on profits of company as positive customer perception
can increase brand loyalty and generate referrals which influences target audience to make
buying decision of brands offerings which contributes in making more revenue or improving
profit margins. Alternatively, they may encourage their peers to visits the place and make
purchase decision for its services that contributes in revenue generation practice for the
company. However, consumers having bad perceptions about the company are shared more
against good one.
Rise in inflation rates: Due to high of capital investment, profitability of hospitality
industry is more affected by economic sustainability issue that is rise in inflation rate than other
industries. Rise in rates of inflation impacts hospitality businesses through substitution effects,
interest’s rates as well as pricing. As inflation hedges, luxury hotels hold the most promise. In
context to Holiday Inn, rising inflation rate provides the company with pricing power
and increase their profit margins. If profit margins are rising, it means the prices that companies
charge for their products are increasing at a faster rate than increases in production costs.
Furthermore, for Rosewood Hotel, rising inflation rate reflects that unless income increases at
the same rate, people are worse off that contributes in lower levels of consumer spending and a
fall in sales for businesses that declines profitability at great extent. The strengthening of the
currency appears to be beneficial to luxury returns as well. In the rising inflationary environment,
unevenly growing prices lower some customers' purchasing power and this erosion of real
income is the single most significant cost of inflation. The threat of inflation has resurfaced on
the operators' and authorities' radar screens (Menegaki, 2018). In case with hospitality business,
such as The Savoy Hotels, profitability is impacted by consumer purchasing power that occurs
because of rising inflation rates, which leads to changes in spending and shopping habits for
organisational offerings. It is essential for the company to alter their strategy to maintain
customers, profit margins addition to growth momentum as manufacturing costs rise due to
increasing raw material and transportation expenses together with shifting consumer behaviour.
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Moreover, hospitality industry’s profitability is impacted adversely because of rising inflation
rate as it throws off corporate plans as well as reduce investment.
Nonetheless, modest rise in inflation rates are beneficial in profitability of hospitality
industry. Within The Savoy Hotels, the economic sustainability issues encourage shoppers to
make a purchase now rather than later. Rise in inflationary rates help to disguise changes in a
brand's price positioning. It can be difficult to modify pricing without being detected if all
competitors' prices remain constant (Hussain, Al-Aomar and Melhem, 2019). A structural
pricing adjustment may go unnoticed if inflationary pressures push all enterprises to modify
prices. It caused companies to hold on to their stocks for longer periods of time in the hopes of
achieving greater prices the next day that contributes positively in impacting profitability of the
hospitality entity.
Preserving biodiversity as well as climate change: Companies, their bottom lines as well
as the greater environment in which they operate are all closely linked, and a disruption to
biodiversity has major ramifications for them, their bottom lines, and the larger environment in
which they operate. The environmental sustainability issues that is preserving biodiversity
addition to climate change impacts on profitability of hospital industry in many ways. Climate
change impacts of hospitality companies, that are Hilton Garden Inn, Holiday Inn, Rosewood
Hotel and many more as extreme weather is increasing the cost of operations and reducing the
number of tourists visiting certain destinations. Although local and national environmental
policies and penalties are being introduced in cities and countries around the world so that hotel
can manage their practices earn certain level of profitability. By maintaining biodiversity, the
hospitality sector has a lot of room to expand and become more resilient. For The Savoy Hotels,
preserving biodiversity impacts on profitability as the company relies on species along with
ecosystem services in processes. Through treating along with dissipating water, controlling air
composition addition to maintaining water and soil quality gains incentives from government
which adds its reserves leading to improving profitability. Likewise, climatic change in form of
temperature rise as well as weather pattern dynamics, working conditions in hospitality industry
becomes harsher (Agyeiwaah, 2020). Drought, water stress together with and severe
temperatures are all examples of climate change. Longer-term changes in weather patterns
frequently result in higher operational costs for hotel owners, or possibly the inability to operate
at all. Physical labour jobs, particularly those that require working outdoors become more
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difficult and the risk of health and safety in the industry increase. Costs in hospitality industry
rises as an outcome of this that leads to declining profitability levels. Climate change drives
innovation, resulting in new products and services that are less carbon intensive or enable others
to reduce carbon emissions. In association to The Savoy Hotels, Extreme weather events have
the ability to disrupt supply chains, making it more difficult for enterprises to obtain the
resources and supplies they require. Profitability of the business is impacted with increment in
costs as a result of regulatory limits on goods linked to climate change.
Explain and critically evaluation of importance of corporate sustainability management in the
hospitality industry
The term corporate sustainability management could be said to a practice of company for
meeting sustainable activities. In other terms, it is an activity of maintaining an organisational
influence on the three principal bottom streams including profit, people as well as environment
such that all three can coexist and thrive well into the future. Within hospitality industry,
corporate sustainability management serves purpose of creating programmes that benefit people's
lives, the environment and future generations. Through applying corporate sustainability
strategy, hospitality business, such as Hilton Garden Inn are committing to using natural
resources responsibly, ensuring that all people involved in business process are treated fairly and
investing for the long-term wellbeing of the planet. Management of corporate sustainability
acknowledges that resources of the globe are restricted and aims to conquer the overuse of said
resources. In Hilton Garden Inn, collective efforts of the environmentally conscious enables to
preserve resources for future generations.
Sustainability policy of The Savoy Hotels is “Savoy Green Spirit” through which the
company carry out practise of sustainable and environment management for reduce
environmental impacts of its operations and programs, to prevent pollution and make rational use
of natural resources (Sustainability Policy of The Savoy Hotels, 2022). It works for reducing
pollution's effects on the environment and contribute to economic growth in order to improve the
quality of the environment and society for current and future generations. Mentioned below are
critical evaluation of importance of corporate sustainability management within hospitality
industry:
Cost reduction: Within an industry, there are certain critics which says that corporate
responsibility necessitates a reduction in profitability. Nonetheless, opposite is true. In aspect to
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hospitality company, development and management of sustainable practices at Rosewood Hotel
is significant as it streamlines operational efforts while preserving and enhancing optimum
utilisation of resource that improves business productivity while declining overall running costs
(Leung, Xue and Wen, 2019). Moreover, The Savoy Hotels, sustainable practices such as
insulating buildings for using less heat as well as turning off office lights at night time and
making changes for using production or planning software for economic operations leads to
reducing costs.
Compliance with regulations: With focus towards sustainability along with long term
success, corporate sustainability management makes it easy to execute certain of legal
requirements of government for the industry. In hospitality industry, with ongoing outcry
towards environmental degradation along with the contribution in deterioration, government of
UK have stepped out for solving the concern. It has led to introduction of certain numbers of
governing regulations which aim for helping hospitality industry to operate safely within
impacting on environment in negative manner (ElShafei, 2020). Companies, for example, The
Savoy Hotels which emphasis on growing sustainable business find it easy for complying with
regulations as they build a room for certain kind of occurrences. It is deliberate choice of the
establishment to adhere regulations while operating in the industry which takes it to another
level.
Attractive to investors and employees: Sustainability management is widely regarded as
a positive factor that provides several benefits to a business and industry. The majority of people
today prefer to work for industries that are concerned about society's good influence and the
environment. As a result, it is simple to attract young and bright staff as well as possible
investors to an company and industry simply because they offer long-term solutions to the
customers' problems. In context to hospitality industry, competent and well-intentioned staff can
easily take the industry to the next level and nurture success. And besides, no one wants to be
associated with irresponsible businesses that destroy the environment and neighbouring
communities (Hán, Petříček and Chalupa, 2020). In The Savoy Hotels, when employees see that
the company they want to work for is well-liked and respected in the community, they are more
likely to choose to work there. The managers of the company make sure this is what they portray
as a company by opting for environmentally friendly production processes. Furthermore,
investors also feel confident investing in the firm because it is not mired in a tangle of court
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issues and lawsuits. Additionally, long-term enterprises are associated with contented
stockholders.
Ensures continuation: Natural resources are exploited in some way by every industry.
Water, like the land on which business and industry are built, is essential. When precious natural
resources are depleted or disasters strike the business community, businesses in the hospitality
industry find it challenging to function and prosper. For example, implementing corporate
sustainable practises inside The Savoy Hotels improves firm continuity by preserving or
regenerating available resources and introducing disaster prevention and preparedness initiatives.
Reduction of waste: The likelihood of wasting resources is minimised when industries
adopt sustainable manufacturing strategies. One of the smartest corporate sustainability practises
to implement as a firm in the hospitality sector is recycling to ensure that all resources are
properly utilised. Fortunately, since business owners of The Savoy Hotels identify areas where
recycling may operate inside the system and operations, this is a simple task. Aside from that, a
general emphasis on the recycling process is put in place to ensure that less resources are
consumed at any given time. Workers of the hospitality establishment are urged to focus on
minimising waste by employing the proper practises.
Improves image and provides with competitive advantage: In an industry, say,
hospitality industry, the most successful businesses are those that can outperform their
competitors. Customers build the brand equity of a socially responsible company, that is
Marriott, through enhancing its future profits and goodwill. Therefore, CSR activities are modes
for companies to increase their reputation which affects the brand equity as a result. One of the
simplest ways for The Savoy Hotels to keep clients coming back is to guarantee that you have a
better offer than your competitors. With corporate sustainable management, managers make sure
to portray the brand in such a way that potential clients and buyers find it enticing (Raab,
Baloglu and Chen, 2018). While advertising is great, it's much easier to get achievements when
people know they can rely on organisational items for the greatest prices. For example, as a
company, it aids The Savoy Hotels in determining what makes consumers pleased. Some clients
exclusively purchase products or visit the firm because it adheres to the essential sustainable
requirements. When customers and clients have faith in the brand, it quickly become sustainable.
It becomes much easier to do business once customers are convinced of this.
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