The hospitality sector, particularly hotels, must practice business sustainability to drive long-term growth
Editor’s note: This is the first of a two-part comment piece.
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 alarming wake-up call for the industry and it cannot return to the usual business 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.
True “business sustainability” requires an organization 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 strategizing for sustainable business, however, there’s no one-size-fits-all formula. Sustainable business strategies are usually unique to each organization as they tie into larger business goals and organizational 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 organization’s competitive edge, simultaneously improving its reputation and increasing its ability to attract personnel, customers and suppliers.
The road to 100 percent sustainability is long, and numerous approaches will need to be tested before a company or organization can have the most positive impact.
Profitability is vital for the hotel business. In addition to survival, it ensures growth. What is done environmentally and socially must go hand in hand with profitability.
Naturally, organizations put more weight on business results and profitability, but the overall image and positioning are just as important for the medium-to-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’re now seeing unprecedented changes in the way business has to be conducted to create value and growth. Ideally, a successful hospitality organization will achieve a sustainable competitive advantage by offering new guest experiences that resonate at an emotional level. It’s 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 road map, 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.
Any business enterprise must conduct business legally and ethically if it wishes to survive, grow and thrive, particularly the hospitality sector, as it is a people-first business.
This encompasses, among 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 organization’s productivity by minimizing 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 organization’s managers, shareholders, and employees to comply with.
Clarity on the company’s code of conduct and corporate governance must be 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 organizational and administrative requirements, personal conduct, conflict of interest, discrimination and harassment, reporting and financial integrity, as well as 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 organization.
Sustainable business is now the 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.
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 programs, 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 organization’s services (including firm opposition to child labor, modern slavery and human trafficking).
Good social governance will also promote workforce diversity and the eradication of racial discrimination.
Safety and security within hotels are also of paramount importance in the post-pandemic world. Expectations are high, and no compromises are accepted.
Overexploitation of natural resources in pursuing economic growth and development has negatively impacted the environment and caused these resources to become scarcer and costlier.
To be environmentally responsible, an organization should ensure its business activities do not damage the environment, the climate or nature’s resources.
The author is a 50-year veteran of the hotel-hospitality-travel industry with a wealth of experience acquired in four continents, Asia in particular. He is a long-time resident of Hong Kong, a retired CEO of Shangri-La International, and founder of Angelini Hospitality.
The views do not necessarily reflect those of China Daily.