Sustainable Business Operations Within the Hospitality Industry Essay

Executive Summary

This investigation explores the role of sustainability within the scope of the hospitality industry, as well as its primary issues and challenges that the involved companies tend to face. It was figured out that unreliable sustainability reports and inappropriate corporate social responsibility policies along with some external dangers hinders firms’ addressing of sustainability issues. On the best practices of Hyatt and Yum! Brands it was proved that a sustainable strategy is a crucial element of business success. Then, it was found that consumers play an essential role in developing sustainable supply chains by their passive and active rejection from dealing with unsustainable practices. Finally, it was recommended to create more positions of “knowledge agents”. It was supposed that policymakers in developing countries may justify the contribution of sustainability to welfare, in the developed ones – to provide refunds for sustainable cooperation.

Introduction

It seems that sustainability has been the primary theme of many scholarly discussions. They indicate the importance of this strategic element for business operations. The hospitality industry tends to pay much attention to the mentioned aspect as customers are becoming more demanding. In this paper, the sustainability issues within the said market and the related best practices will be discussed, as well as recommendations on the matter will be provided.

Sustainability Issues and Challenges within the Hospitality Industry

As the economy develops, the role of the hospitality sector intensifies, and plenty of people are being involved in it. An essential place in the mentioned sector is occupied by the hotel business, the wide and varied nature of which also covers elements of related industry sectors, for example, food, leisure and entertainment. Accordingly, this business demonstrates a broader and more diverse organisational structure than other areas of the industry (Hospitality: A complete overview, no date). Direct participation in the service process gives rise to specific problems: it is necessary to create an appropriate environment where the service is carried out. Since the provision and consumption of services in the hospitality industry occur simultaneously, here, unlike in the production sector, the storage of services is not required. Services occur in the process of direct communication and interaction with the client.

Unlike production, the service process is limited in time considerably. In a period of falling demand and high prices, underutilisation in enterprises cannot be compensated in the following days of this high demand. Another difference between the hospitality industry and production is that the supply of services and consumers must be connected with each other, so the economies of scale cannot be achieved here by using centralised supplies for different markets. Offering services directly to the client limits service locations and reduces the volume of operations. The role of management in the hospitality industry is determined by the constantly changing market conditions for its services, competitiveness, the desire to increase profitability and the necessity of the high quality of services (Frangos, 2015). Thus, a comprehensive understanding of the processes in the market is required.

Currently, a plethora of clients are concerned with the environmental aspects of a hospitality business they deal with. Hence, for the involved actors, it is vital to behave ethically and environment-friendly. For this reason, “sustainability has been one of the most noticeable hospitality trends of recent times, with a growing number of hospitality businesses promoting their eco-friendliness” (Hospitality trends, no date, para. 7). Such conditions require, for instance, menus with healthier options from restaurants or more robust room services from hotels. An exhaustive formulation of environmental issues that occur within the scope of the hospitality industry might be as follows. Jones, Hillier, and Comfort (2016, p. 47) state that these issues are: climate change, water stewardship, waste management and recycling, environmentally responsible sourcing, the protection of natural resources and the reduction of environmental impacts. In order to address the mentioned aspects appropriately, businesses are to develop consistent and coherent strategies.

It seems rational that in the framework of sustainability issues, along with the environmental ones, social policies also matter to a significant extent. They include equal possibilities within the workplace, health and safety, acceptable labour terms, supremacy of human rights, maintenance of local communities and charity (Jones, Hillier, and Comfort, 2016). Furthermore, the economic aspect also has a notable and essential role. It indicates the creation of workplaces, the provision of quality to clients and building shareholder value (Jones, Hillier, and Comfort, 2016). Given such a broad and convincing range of the issues of sustainability, it might seem that chains, corporations and companies of the hospitality market are to implement the best practices to remain competitive.

To be more precise, the determinants of sustainability within the hospitality market may be considered as being built around business efficiency and the aspiration for competitive advantages. Plenty of environmental strategies and achievements are included in the sustainability reports of the primary actors of the industry. Mostly, they indicate the importance of the reduction of water and energy consumption, as well as benefits that were gained from this. Moreover, such reports reveal corporate commitments to personnel, which make an accent on training programmes and consistent and fair labour practices. The described approach means that hospitality companies pay much attention to transparency, as well as to relevant, reliable and convincing data.

The mentioned reports play a vital role for managers as they found their activities and principles of work on the provisions given in these reports. Being among the most crucial resources of hospitality firms (Hospitality management, no date; Prud’homme and Raymond, 2016), the way a manager organises his or her working environment is important. Thus, the ideas and regulation formulated by these firms should be evidence-based and concrete. Nevertheless, it seems rational to say that most corporations carefully choose environmental and social information on which they account. Hence, they define their determinants of sustainability, founding it on their own experience and communication with stakeholders. Such a policy does not genuinely support managers’ performance regarding the development of a sufficient sustainability strategy. The world’s most noticeable chains have set up programmes that are based mostly on commercial interests. The support of “natural ecosystems and a reduction in demands on the earth’s natural resource base” has been moved to the second plan (Jones, Hillier, and Comfort, 2016, p. 48). The described approach cannot be considered acceptable in the current conditions.

Then, the internal challenge that hinders the successful implementation of sustainable practices might be an appropriate realisation of corporate social responsibility, or CSR. A plethora of scholars has investigated the issue and united in the statement that a proper CSR contributes to a great extent of employee’s job satisfaction (Kim et al., 2018; Singal and Rhou, 2017). Healthy internal working environment results in a focus on developing and implementing sustainable practices, which results in significant and profitable performance. Personnel might be considered as a critical factor in providing the best strategies of sustainability because within the hospitality industry, they are responsible for clients’ satisfaction directly (Singal and Rhou, 2017). Hence, the way a company build relations with its employees via a CSR might be defined as a key element and predisposition of the further implementation of sustainable practices.

Finally, a number of external challenges might take place and negatively affect sustainable performance. Among them are taxes and fees, growing competition, the unstable flow of constant customers and reputation being formed by clients independently via social media. Such severe conditions indicate the compliance of adopting sustainable practices. The mentioned factors tend to vary from period to period; thus, hospitality actors should apply flexible and adaptive policies. It requires a vast amount of resources, as well as continuous improvements and market investigations. To summarise, the hospitality market provides its actors with a notable amount of challenges and issues of both internal and external character. It allows assuming that the below analysis of the best practices and how these challenges and problems are being addressed might contribute to an in-depth understanding of the theme being discussed.

The Best Sustainable Practices within the Hospitality Sector

Hyatt’s Case

As mentioned above, the hotel industry might be the most important sector within the hospitality market. Hence, it seems reasonable to suppose that the exploration of one of the successful and profitable hotel chains is quite relevant to discuss the best sustainable practices. Hyatt is a luxury chain that has gained an excellent reputation and is among the most remarkable actors in the market (Hyatt’s competitors, no date). It should be mentioned that the company tend to care about its sustainability issues, which is evident from the arguments below.

To begin with, Hyatt states that its environmental policies are aligned with the Sustainable Development Goals (SDGs) of the UN. Among them are clean water and sanitation, affordable and clean energy, responsible consumption and production and climate action (About Hyatt, no date). The Hyatt chain makes noticeable efforts to deal with environmental challenges. In order to build more sustainability, the company’s guidelines for new construction and renovation highlight central themes – insulation, lighting, cooling and heating effectiveness and water and ventilation systems. (About Hyatt, no date). The firm founds its strategy on reliable and consistent data that is being obtained via its environmental management database. The latter is called Hyatt EcoTrack, that is a primary tool to collect sustainability data from properties worldwide. What is more, the company does not hesitate to cooperate and interact with various organisations and rivals within the scope of reducing waste.

The chain also pays attention to the construction of its sustainable social practices. It is visible from Hyatt’s corporate responsibility that indicates the importance of human resources as well as appropriate care about them. The company aims to provide its staff with a friendly working environment. According to Hyatt’s Code of business conduct (2018), the routine is to adhere to the following provisions: mutual respect, diversity and inclusion, safe workplace and supremacy of human rights. This policy allows personnel to focus on their duties, which leads to a significant chain’s performance as a whole. Hyatt gives its employees diverse possibilities for professional development with numerous training and exchange programmes between properties.

It should be stated that the chain tends to demonstrate a great concern about its sustainability practices. Such an approach may be considered as a crucial element to remaining successful within the hospitality industry (Thompson, no date). Hyatt’s strategy also shows a notable extent of adaptiveness as in the current conditions of the COVID-19 pandemic (Ecker, 2020), the firm’s policies are flexible. It is apparent from the fact that Hyatt does not panic and not fire employees in order not to lose assets.

Yum! Brands Case

The fast-food market might also be considered as an essential element of the hospitality industry. Yum! Brands has been among crucial actors within the mentioned market for a substantial period as remains profitable and recognisable (Yum! ’s competitors, no date). Functioning at the global scale, for the company that has 50,000 restaurants in about 150 countries (Building global, no date), it is essential to develop significant and sustainable practices. The necessity of the latter is emphasised by the fact that the fast-food market is exceptionally competitive, and plenty of actors are paying attention to sustainability.

In the framework of addressing environmental issues, Yum divides its activities into green buildings and supply chain. The first means that the company pursues the goals of “reductions in energy consumption, water use, GHG emissions and waste” while organising functioning of the restaurants (Our recipe, 2017, p. 7). The second implies protecting forests, supporting animal welfare and enabling noticeable antimicrobial stewardship. It should be mentioned that similarly to Hyatt, Yum tends to follow international initiatives and standards within its sustainable strategy (Our recipe, 2017, p. 64). There is a number of great attainments within the mentioned framework. According to Our recipe (2017, p. 29), “Yum! restaurants work to recycle used cooking oil, cardboard and plastic waste, … surplus food from our restaurants, with 6.9 million pounds of food donated in 2017.” Moreover, Yum demonstrates notable achievements in addressing the issues of animal welfare, energy, climate change, sustainable sourcing, waste and recycling and water.

The corporation also is dedicated to the highest standards of CSR. Yum states that its crucial goal is to implement the best practices regarding employee development, diversity and inclusion, human rights and labour. The company aims “to create an inclusive and ethical workforce … and to drive business results by connecting meaningfully with diverse employees, customers, franchisees and suppliers worldwide” (Our recipe, 2017, p. 44). The latter is intersected with the “training and development that builds world-class leaders and business results” (Our recipe, 2017, p. 44). Such a coherent and unified CSR results in the efficient talent retaining and building a working environment of mutual trust and cooperation.

It might be supposed that the company never misses the opportunity to implement new sustainable practices in its performance. The described approach of Yum! Brands seems to follow crucial elements of success within the fast-food market particularly (Xaxx, 2019), and within the hospitality industry generally (Tanner, no date). Achievements of economic, social and environmental character that are discussed above prove the latter claim, which is evident from a significant market share (Yum!’s competitors, no date). It might be concluded that if a company continually develops and improves a sustainability strategy, both profits and recognition will become an integral part of the business.

Role of Consumers in Developing a Sustainable Supply Chain

It seems reasonable to claim that customers participate in the process of developing a sustainable supply chain to a great extent. The above discussion refers mostly to sustainability from a company’s perspective, but the exploration of consumers’ role is also essential. They take part in the implementation of sustainable approaches in a supply chain through their activism. For instance, they may refuse from buying from or cooperating with firms that demonstrate a low level of environmental and social responsibility. Such action puts pressure on hospitality service and products providers to adhere to the fundamental principles of sustainability. Quite a popular example of the described situation might be how McDonald’s decided to stop using antibiotics while raising poultry. The mentioned shift was caused by the increased health concerns of the firm’s clients. Hence, this crucial decision of the industry’s giant was founded on the aspirations of consumers to a healthier way of life.

The above example might be defined as the result of the passive activity of consumers as they did not take any action – McDonald’s solution was based mostly on data collected. It should be emphasised that if customers tend to act in order to protest companies’ unsustainable supply chains, the impact is even bigger. For instance, consumers may launch a vast promotion of environment-friendly production, luring people worldwide. The more potential and actual clients are involved, the more substantial the influence is. Unsustainable corporations will simply have no choice but to implement appropriate practices. In another case, such firms will face the lack of customers, which is likely to result in several issues – starting from a lousy reputation and ending with insolvency.

Furthermore, consumer-orientated corporations and chains tend to encourage their clients to be concerned about sustainability issues. A bright example might be the unique approach of Starbucks. The firm developed a tool on its website with the help of which consumers could calculate the number of trees that would be saved if they use their own mugs rather than Starbucks’ paper cups. Then, it might be suggested that organising and promoting sustainability-related forums and initiatives will motivate consumers to adopt sustainable practices. Thus, it should be stated that both hospitality companies and consumers are capable of making a significant contribution to the development of a sustainable supply chain. The intersection and interdependence of these two perspectives indicate the importance of the high level of awareness about the current problems that may take place due to unsustainable corporate values.

Recommendations on Reducing Harmful Environmental and Social Impact

From the investigation above, it is quite obvious that the aspect of sustainability has become critical nowadays. Its continuous implementation in an appropriate way is possible if the scholar findings are available as they make it possible to determine an evidence-based foundation for a sustainable strategy. Within the environmental scope, it seems important that businesses and consumers are to be acquainted with the related issues properly. Hence, it is essential to develop and adopt environmental knowledge base and people who are responsible for its deliverance. The scholarly dimension provides a significant concept of “knowledge agents” (Martínez-Martínez et al., 2019). Martínez-Martínez et al. (2019, p. 382) define them as “individuals with the willingness to invest their own resources into acquiring environmental knowledge for the benefit of the environment and, directly or indirectly, of their own institution.” These agents are to organise the process of advancing the sustainability awareness of both companies and clients. It has been proved that the presence of such a position in hospitality companies contributes to the improvement of business performance; thus, the increase of these positions is a good option for providing sustainable policies.

Furthermore, the issue of sustainability is to be handled consistently by policymakers too. In developing countries that do not have many natural resources, authorities may encourage consumers to apply sustainable practices by providing the rationale that these practices result in a country’s welfare. A notable example might be the sustainable approach of the Moheli Laka Lodge hotel from Comoros Islands. Due to the implementation of solar panels, the resort contributes to the country’s reduced usage of diesel, with which there are many problems. If the consumers reject the services of diesel-using hotels, Comoros Islands economy will suffer less. In developed countries, it is visible that the hospitality market is becoming digitalised (Top 10, no date). Policymakers may promote governmental refunds or discounts via social media for cooperating with sustainability-orientated hospitality companies.

Conclusion

To conclude, the hospitality industry has become an essential element of the global economy nowadays. The issues and challenges of sustainability are of the characteristic of this market; hence, many actors aim to address them befittingly. The above investigation revealed several sustainability issues of environmental, social and economic character. Then, the challenges that hinder handling these issues were identified. These are unreliability of hospitality companies’ reports and insufficient CSRs – internal ones; taxes and fees, growing competition, the unstable flow of constant customers and reputation being formed by clients – external ones. The best practices of Hyatt and Yum were analysed, and it might be assumed that the maintenance of sustainable practices is their common feature that leads to success. Moreover, the importance of consumers’ role in developing sustainable supply chains was discussed. The recommendations are to create more positions of “knowledge agents”. For policymakers in developing countries, it was suggested to argue the contribution of sustainability; in developed countries – to provide refunds for cooperating with sustainable businesses.

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