Giovanni Angelini, August 06, 2021
Revisiting the basics and understanding the challenges that matter – in pursuit of a resilient future.
This is a time for hospitality operators to continuously review their strategies and rethink their entire processes – from products to administration to finances to sustainability – and adjust accordingly to match shifting consumer preferences, digital transformation, and accelerated global trends.
There has never been a more fierce wake-up for the industry and cannot go back to business as usual of the past. In today’s rapidly changing and uncertain business environment, adaptability, agility and sustainability are – and will continue to be – crucial keys to success.
Building a better future
True ‘Business sustainability’ requires an organisation to have a clear and comprehensive strategy for driving continuous, profitable growth while being mindful of its social, environmental and financial impacts.
When it comes to strategising for sustainable business, however, there is no one-size-fits-all formula. Sustainable business strategies are usually unique to each organisation, as they tie into larger business goals and organisational principles.
Sustainability is a business model that creates, delivers, and captures value for all stakeholders without the natural, economic, and social capital it relies on. It also allows businesses to meet their current needs without compromising the ability of future generations to meet their own. The objective is to create a better future for all involved.
Managing and developing business sustainably involves doing more than what’s demanded by laws, regulations and market needs. It requires strong leadership, teamwork, and responsibility. Also, it must ensure that short-term profits don’t turn into long-term liabilities.
Sustainability management can strengthen an organisation’s competitive edge, simultaneously improving its reputation and increasing its ability to attract personnel, customers, and suppliers.
The road to 100 per cent sustainability is long, and numerous approaches will need to be tested before a company or organisation can have the most positive impact.
Economic Responsibility
Profitability is vital for hotel business. In addition to survival, it ensures growth. What is done environmentally and socially must go hand in hand with profitability.
Naturally, organisations put more weight on business results and profitability, but the overall image and positioning are just as important for the medium-long term. And when it comes to “People, Planet, and Profit”, one cannot be achieved without the other.
Sustainable management pays – both in terms of efficiency and productivity, as well as brand loyalty, employee retention, and overall financial returns.
We are now seeing unprecedented changes in the way business has to be conducted to create value and growth. Ideally, a successful hospitality organisation will achieve a sustainable competitive advantage by offering new guest experiences that resonate at an emotional level. It is a fast-changing industry, and leaders must evolve to embrace the many new business dynamics – including a new generation of attitudes, expectations, and innovation.
Planning and forecasting for a sustainable future is a critical element of running a business. No business, including hotels, will continue to grow year after year. A clear vision and strategy, a business roadmap, a detailed initiatives plan, and key performance indicators are essential for pursuing long-term growth.
In this fragmented, seasonal/cyclical, and perishable industry, continuous change is the reality. To successfully respond to market needs and plan for the future, a mindset shift is essential.
Ethical and Legal Responsibilities
Any business enterprise must conduct business legally and ethically if it wishes to survive, grow, and thrive. Hospitality business in particular as it is a people-first business.
This encompasses, amongst others, business actions in line with the spirit and observance of the law, protection of consumer rights, and respect for the provisions of business contracts.
Ethical practices contribute to an organisation’s productivity by minimising losses, creating trust with partners and suppliers, establishing customer loyalty, and maintaining a successful team of employees.
Integrity, honesty, trustworthiness, respect for others, accountability, diversity, equal opportunities, and others are all essential topics for an organisation’s managers, shareholders, and employees to comply with.
Clarity on the company’s code of conduct and corporate governance, and embraced by all in full.
The code of conduct/governance should contain a broad range of policies covering legal, social, and professional obligations, customers and other business relationships. Some examples include organisational and administrative requirements, personal conduct, conflict of interest, discrimination and harassment, reporting and financial integrity, and compliance with the law.
Responsible procurement, data protection, and a secure and anonymous whistleblowing system should also be part of the code of conduct. The principles of good governance are crucial to managing any business or organisation.
Sustainable business is now mainstream, and the hospitality industry has to move beyond symbolic statements on ethics and sustainability and create a strong culture built on trust, respect, and honesty.
Philanthropic and Social Responsibility
Businesses need to take responsibility for both the ‘internal’ and ‘external’ impacts of their processes and operations and seek to do good with activities that benefit their local and broader communities.
Being a ‘good corporate citizen’ means acting responsibly and demonstrating care by implementing programmes, initiatives, and best practices that bring value to local communities while protecting natural resources. From job creation to fundraising, hotels play an important role in their communities. It’s important to remember that these communities are a significant source of revenue too.
A clear rule is that no one should be exploited in the preparation and provision of an organisation’s services (including firm opposition to child labour, modern slavery, and human trafficking).
Good social governance will also promote workforce diversity and the eradication of racial discrimination.
Safety and security within the hotels are also of paramount importance in the post-pandemic world. Expectations are high, and no compromises are accepted.
Environmental Responsibility
The overexploitation of natural resources in the pursuit of economic growth and development has negatively impacted the environment and caused these resources to become scarcer and costlier.
To be environmentally responsible, an organisation should ensure its business activities do not damage the environment, the climate, or nature’s resources.
Hotels are large consumers of resources, and the amount of overconsumption and wastage, in general, can be high. It is essential to find ways to ‘reduce-reuse-recycle-upcycle’ and be as eco-friendly as possible. Customers will appreciate it, and, in some cases, even demand it.
With global warming and energy use affecting how we consume critical resources worldwide, basic utilities are under increasing strain, leading to increased prices, volatility, and shortages. While climate change is widely perceived as the world’s biggest threat, many countries and organisations have yet to take any effective action to limit their environmental impact.
Primary targets (KPIs) and measurements for any company should include energy saving, reduction of greenhouse gas emissions (carbon output), water consumption, wastage, recycling, responsible sourcing, and others.
With shortages of food and water in many parts of the world, hotels can help to make a big difference by fully embracing sustainable operations. The cost of all utilities will continue to increase, and hotels have to look at becoming self-sufficient within a reasonable timeframe, especially in terms of electricity.
With the vast majority of the world’s population breathing unsafe air, this is a major concern. Hotels have to play a key role in reducing emissions, limiting waste, saying no to single-use plastics, and championing other sustainable practices. Indoor air quality and proper filtration are of particular concern for consumers in the post-pandemic world, and hotels must respond.
It has become necessary for organisations to educate and train (and re-train) employees on the importance of sustainability, and inspire them to create and implement programmes that benefit the environment. Measurable environmental targets with an easy-to-follow score and rating process can help to drive group-wide implementation (with recognition and rewards for the high achievers).
Note: The ISO 26000 guidelines and selected sustainable development goals outlined by the United Nations can be used as guides to develop suitable sustainable processes. But, in principle, a successful organisation can and should do more than this.
Manage and Measure (targets/KPIs and metrics)
Simply put, hoteliers can’t save what they aren’t measuring, and if they can’t measure it, they can’t improve it.
In principle, all targets and KPIs must be measurable, relevant, specific, and time-bound. Targets should be aggressive but achievable, and all stakeholders must accept and embrace them in full.
Measuring a hotel’s carbon footprint is not an easy task, and the complicated formula required is often incorrectly applied. For organisations seeking to measure their emissions, it is important to use reliable software and have a qualified independent verification process.
As the climate crisis moves to the top of consumer agendas, it’s becoming increasingly common for organisations (particularly public listed companies) to try to calculate and communicate their carbon footprints.
The typical reporting metric for carbon emissions is usually measured in tonnes of Carbon Dioxide (CO2) per room per year or kilogrammes of CO2 per room per day. It can also be measured per square meter. The key objective is to reduce total emissions even as business continues to grow, mainly by making strategic changes in operations.
Immediate impact; hotels have to also address other important matters that directly relate to carbon emissions, such as building design, procurement and supply chain, plastics and paper usage, waste management (food waste, sewage, wastewater), guest transportation, recycling, upcycling, consumables, cleaning chemicals and so on…
Where are hotels sourcing their restaurant ingredients and other operating supplies? From licensed and sustainable suppliers? Are they using eco-friendly packaging and transportation methods? What type of storage is needed? Does it use a lot of energy?
These are just a few of the questions that must be considered when pursuing operational sustainability.
As for the answers – the increased use of renewable energy (solar and geothermal systems), energy-efficient appliances, smart chillers and heating systems (HVAC), and clever use of natural light are just some of the essential steps hotels can take to reduce carbon emissions.
Utilities (Suggested Benchmarking/Metrics)
Measurements: Electricity–KWH. Water–CU. FT/M. Gas–LBS/KG. Fuel–Gal/Lit. (One table each for Electricity, Water, Gas, Fuel, Whole property. Plus F&B outlets?)
| A – Consumption (units) | Current Period Targets, YTD | Current Period Actual, YTD | Previous Year Actual, YTD | Previous 2 Years YTD |
|---|---|---|---|---|
| Total consumption | ||||
| Per Available Room | ||||
| Per Occupied Room | ||||
| Variance, Total Consumption | ||||
| B – Costs ($) | ||||
| Total Costs | ||||
| Per Available Room | ||||
| Per Occupied Room | ||||
| % of GOR | ||||
| Variance, Total Cost |
Other Benchmarking (own formula); Plastics/Styrofoam, Paper, Wastage, Recycling, Upcycling, Consumables, Contaminated Waste/Grease, Plant-Based Products and Others.
The promotion and selling of plant-based foods is a clear area where most hotels can do a much better job. It is a proven fact that “animal agriculture” is a major source of air pollution. In addition, most farmers today commonly use feed additives such as growth promoters and antibiotics, which cause drug resistance, not only in animals but in humans (meat eaters) as well. Another pandemic in the making?
Important Question; Can you measure your property’s carbon footprint?
Also, it is important to plan, implement and monitor activities and processes that can offset a business’s carbon footprint – i.e. training and education activities for all employees, tree planting programmes, replacement of old equipment, efficient use of technology, and so on.
In this fast-changing business landscape, the key objective of a sustainable business journey is to create a caring culture and long-lasting success.