Department of Hotel and Tourism Management, Cyprus University of Technology


Department of Hotel and Tourism Management, Cyprus University of Technology


Global trends in the field of Corporate Social Responsibility (CSR) such as the welfare of employees and the shortage of natural resources, along with technological innovations have all resulted in a new set of stakeholder requirements. Stakeholders are nowadays demanding not only for sustainable products and/or services, but also require the corporations behind the brands they are consuming to offer greater transparency and reveal their accountability with regards to the way they carry out business. Consequently, to meet the needs of stakeholders, many corporations have already incorporated the sustainability discourse in their business strategies. More recently, corporations have started to publish sustainability reports, as a means of informing their stakeholders and shareholders about their organizations’ environmental and social performance.

Previous studies within the hospitality sector, indeed confirm that hoteliers have already started to incorporate CSR and the reporting practise in their businesses, as they have documented an increase in sustainability reporting in the hotel sector over the past few years. Evidence suggests that by incorporating sustainability in their business strategies, hotels can decrease their operating costs, differentiate their product, and enhance their brands’ image. In addition, by drafting sustainability reports to comment upon these issues, hotels can attract more customers, provide better hospitality products, assist in the formation of sustainable tourism destinations, and improve their overall performance efficiency. The paper reaches the conclusion that sustainability reporting within the hotel sector will gain more momentum in the near future as it will become a valuable tool for gaining a competitive advantage

With this in mind, the purpose of the paper is to explore the notion of CSR within the hotel industry and to document the benefits derived by the reporting practise. For the purposes of the paper, the researchers will review existing literature in the field of CSR, sustainability and sustainability reporting in the hotel industry and retrieve data regarding the environmental and social performance from the hotels’ corporate websites.

Key Words: corporate social responsibility, sustainability, sustainability reporting, hotel industry


Global trends in the field of Corporate Social Responsibility (CSR) such as the welfare of employees and the shortage of natural resources, along with technological innovations have all resulted in a new set of stakeholder requirements. Stakeholders nowadays demand not only environmental protection and sustainable products and/or services, but also require businesses to offer greater transparency and accountability with regards to the way they carry out business. As a result, in an effort to satisfy the demand for sustainability, many business organisations are changing the way they operate and create profits, whereas they are also publishing sustainability reports in order to inform both their shareholders and stakeholders regarding their organisations’ environmental and social performance.

The hotel and tourism industry, being amongst the world’s fastest growing sectors (De Grosbois, 2012) with a 9% contribution to the global GDP, amounting to US $6.6 trillion (World Travel & Tourism Council, 2013 report) cannot afford to stay affluent upon the new stakeholder requirements. According to a Deloitte survey, 34 percent of the surveyed travellers are now seeking for environmentally friendly hotels (Deloitte, 2008 in Millar and Baloglu, 2011). Mindful of the stakeholder’s environmental concerns, hoteliers have started to incorporate responsible business practices into their businesses (Millar and Baloglu, 2011:302) whereas many hotel service providers have already committed in adopting the sustainability reporting practice in an effort to cover the demand for greater transparency (Dwyer, 2005; Assaf et al., 2012).

With this in mind, the purpose of the paper is to explore the notion of CSR within the hotel industry and to document the benefits derived by the reporting practise. For the purposes of the paper, the researchers will review existing literature in the field of CSR, sustainability and sustainability reporting in the hotel industry and retrieve data regarding the environmental and social performance from the hotels’ corporate websites.

The need for sustainability

Corporate Social Responsibility

The notion of Corporate Social Responsibility (CSR) refers to the responsible manner by which an organisation can showcase its commitment to carrying out business and its daily operations on an ethical basis. It provides a framework by which business organisations can do well financially by doing good socially and environmentally, and it includes “actions that appear to further some social good, beyond the interests of the firm and that which is required by law” (McWilliams and Siegel, 2001:117). CSR actions mainly focus on the protection, conservation and restoration of the natural environment, the ethical treatment of employees and consumers, and the betterment of the society through community investment.

With the awareness growing regarding the social and environmental consequences of business activity, stakeholders such as governments, NGOs, customers and the public are nowadays demanding businesses to implement responsible business practises (de Grosbois, 2012). As a result, over the last two decades, the notion of CSR has become the new way of doing business and has gained increased popularity, as it has been implemented by a plethora of business organizations as a means of addressing their social and environmental responsibilities by adjusting their business practises to lessen their negative impact upon the environment and the wider society and positively contribute in the communities in which they operate.

Over the past two decades, many terms have been devised in order to describe the multidimensional character of businesses which adopt ethical and sustainable behaviour towards their stakeholders and the wider society. Amongst the most popular terms for the social responsibility of businesses are: corporate sustainability, corporate citizenship and corporate environmental responsibility. Emphasizing on the broad scope of CSR, which goes beyond philanthropy to operating sustainably in all aspects of business activity, the World Business Council for Sustainable Development (WBCSD) has defined CSR as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life in the workforce and their families as well as the local community and society at large” (WBCSD, 1999: 3).

However, as there are no hard laws on implementing CSR and no specific frameworks to evaluate it, the business organizations that go over and above their legal obligations on employing CSR tend to inform the public regarding their CSR initiatives through voluntary communication practises (de Grosbois, 2012). Thus, given the voluntary character of CSR, in the 2001 Green book published by the EU Commission, CSR was defined as “a concept whereby companies integrate social and environmental concerns in their business operations and their interactions with their stakeholders on a voluntary basis” by which they can create new opportunities and gain a competitive advantage.

Sustainability in the hospitality industry

Whereas the business case for CSR by which businesses can create long term shareholder value through the better management of risks deriving from the economic, environmental and social conditions is still developing, the hospitality industry has started to firmly embrace the notion of sustainability. In the 1987 Brundtland report, sustainability was given a holistic and future oriented definition, defined as “a development that meets the needs of the present without compromising the ability of the future generations to meet their own needs” (WCED, 1987: 45).

Business organisations are influenced by the systems surrounding them, which include the business, stakeholder and global environment, and they also have an influence on these systems themselves. As business organisations are inherent parts of social systems and ecosystems, they have an obligation to become more socially and environmentally responsible and contribute to sustainable development. Consequently, the underlying principle of sustainability, which is often referred to as the “Triple Bottom Line” is comprised by three pillars or the “3 E’s” Environment, Equity, and Economics which are seen as equal pillars in becoming a good corporate citizen. According to Assaf et al. (2012: 596), the Triple Bottom Line “reflects the firm’s commitment to create financial, social and environmental values” on a balanced basis.

Many studies have proven a positive correlation between CSR and sustainability with profitability. Consequently, by addressing environmental and social impacts in a systematic way, even more hotel service providers could in fact be taking a leap towards corporate sustainability. According to an MIT study two thirds out of the 4000 survey manager respondents said that sustainability is necessary to being competitive in today’s marketplace (MIT, 2012). Although the benefits from operating in a sustainable manner are mainly intangible, (ie. Competitive advantage, enhanced brand reputation, product/services innovation), business organisations are profiting from sustainability activities. Realising the potential benefits and having acknowledged the notion that the relevant stakeholders for their businesses are not only their customers and their shareholders, but also the external society and the natural environment, a growing number of hotel service providers nowadays choose to implement the sustainability discourse in their business strategies.

Sustainability reporting and its value

According to Morsing (2006:171), CSR communication is defined as the “communication that is designed and distributed by the company itself about its CSR efforts” and can be distributed through sustainability reports, advertising campaigns, the media, or the Internet (De Grosbois, 2012). A lot of studies in the field of sustainability have proved that businesses who manage sustainability issues are financially more successful (Gaggl, 2013). However, in order for consumers and stakeholders to be informed about the sustainability efforts of businesses, companies should publish their sustainability performance. Gaggl, (2013) notes that , by drafting annual sustainability reports to comment on such issues, business organisations can enjoy:

a) enhanced reputation and brand image for being more transparent in the provision of non-financial information

b) better client relationships as the embedment of sustainability in all aspect of business will essentially stimulate innovation which in turn will create new products and/or services and reach new markets

c) better investors/stakeholders relationships as they will be provided with holistic information that will create long term value for the business

Enhanced reputation for being a ‘good’ employer, thus, expectations for employees will have high-potentials thereby attracting top of the line staff.

The Importance of Sustainability Reporting in the Hotel Industry

Businesses are recognizing the increasing need of sustainability reporting due to pressure exerted by stakeholders and consumers Existing research has established that stakeholders are increasingly seeking for greater information and transparency from the corporations behind the brands, services and products they consume (De Grosbois, 2012). Consequently, as the provision of financial information is not enough anymore to embrace all value drivers, CSR communication and sustainability reporting has been gaining momentum.

Being a significant sector within the tourism industry, the hotel industry has a crucial role in contributing to sustainability. Although being a huge provider of social and economic benefits, the industry has a severe impact on the natural environment. Thus, due to the impact of hotels upon the environment with regards to resource consumption, the United Nations Agenda 21 includes a chapter that focuses on sustainable tourism, and has provided the industry with a comprehensive blueprint for action to be undertaken on a global scale (Division for Sustainable Development 1997 in Hsieh 2012). Agenda 21, encourages business organisations “to report annually on their environmental records, as well as on their use of energy and natural resources” (United Nations, 1992). As a result, a plethora of guidelines and standards (ie., EMAS, ISO 50001, ISO26000, GRI) have been developed, all aiming to assist organizations, including hotels, in reporting their performances while minimising their environmental footprint. A study by PwC asserts that over a dozen major hotel operators, including Four Seasons, Hilton, Hyatt, InterContinental, Marriott, Taj and Starwood, are now employing green initiatives to assist them in reaching the minimum standards for a sustainable hotel (PwC, 2008).

Given the fact that previous studies have proven that sustainability reporting has a significant impact on hotel performance (Assaf et al., 2012), the move towards sustainability reporting is justified by the hotel’s need to generate economic welfare and increased profits. However, a crucial differentiation factor for hotels to enable them to derive all the benefits from operating in a sustainable manner lies on how well they communicate their sustainability efforts. Epstein (2008) stated that in addition to the financial reports, the hotel industry must also provide communication with regards to their environmental commitment, whereas, Charkham (2005) noted that adequate flow of information is crucial for businesses’ to be able to reveal their commitment to sustainability.

One way of making sure that the sustainability report fully addresses the stakeholder concerns is to base the report on the company’s Corporate Social Responsibility Strategy, its different pillars and the corresponding action plans for each pillar. Through this process, there is consistency between strategy, actions and performance measurement and companies are able to focus resources on the most important issues for tracking, reporting, and improvement initiatives (Ioannou, 2012).

The rise of the green traveller

The rising ethical concerns regarding the effect that modern consumption has on the environment, the increased attention that environmental and social issues receive from the mainstream media, along with the ever-increasing availability of ethical products and services, have triggered the awareness of consumers regarding the impacts of their purchasing behaviour (Carrigan and Attalla, 2001; Connolly and Shaw, 2006; Crane and Matten, 2004). According to a study by Vora (2007), 43 million U.S. travellers expressed environmental concerns whereas the 2008 National Leisure Travel Monitor survey also found that 85 percent of leisure travellers consider themselves as environmentally conscious (Crocker 2008 in Millar and Baloglu, 2011). In addition to that, the Travel Foundation found that only 4 per cent of UK holidaymakers would choose a five-star hotel rather than a four-star hotel with better sustainability performance (Travel Foundation in PwC, 2008). Therefore, due to the fact that “tourists have become increasingly demanding”, they “force hoteliers to adapt to their new tastes and preferences, including greater respect towards the environment” (Molina-Azorin et al. 2009: 517).

Consequently, by incorporating sustainability in their business strategies, hotels are likely to improve their guests’ perceptions regarding the environmental quality of the hotel and the tourism product they offer, thereby obtaining differentiation from competitors (Molina-Azorin et al., 2009; Chan and Wong, 2006; Kirk, 1998). A study by Travelocity, has found that 80 per cent of travellers would be willing to pay extra so they can visit an eco-friendly destination (Travelocity in PwC, 2008). As a result of the increasing stakeholder demand for sustainability and the considerable interest in social and environmental performance information, many hoteliers are nowadays publicly reporting their social and environmental performance and financial outcomes (Jose and Lee, 2007; Hsieh, 2012). Many hotel websites are becoming an electronic platform to disseminate this kind of information and reach stakeholders quickly and at little cost. By responding to the public’s demand for sustainability and accountability hotels can develop a positive image, increase employee loyalty while also attract and retain customers. One can therefore say that the driving force behind the hotels’ decision to incorporate sustainability and report accountability is the rise of the green traveller.

Reporting creates value for the hotel industry

Legrand et al. (2012a) stated that the main objectives behind the incorporation of sustainability in the business strategy of hotels are the decrease of operating costs and the building of a positive brand image. While the hotel industry is neither responsible for severely polluting the environment, nor is accountable for consuming vast amounts of non-renewable resources, the industry has a significant effect upon the use of global resources (Kirk, 1995; Chan and Wong, 2006). The vast consumption of energy and water, along with the use of consumable products and the generation of solid and hazardous waste, all have a significant impact on the environment. The costs associated with these impacts are great, thus, hotel service providers have reduced revenues, increased operating and employee costs. However, through the use of strategic sustainability and reporting, businesses can track their footprint, minimize risks and increase their opportunities thereby reducing their costs and enhance their value. This is supported by Willy Legrand who found that 74 per cent of hotels are now investing in energy savings to reduce costs (Legrand in The Guardian, 2013).

International hotel chains are nowadays making CSR the centrepiece of their business strategies, underpinning environmental and social concerns within corporate decision-making. For instance, Wyndham Hotels & Resorts (2009) see CSR as “a way of living, working and playing that embodies our vision and values, celebrates our diversity and supports a balance of professional and personal needs”. By reporting their environmental performance and by communicating the initiatives and objectives of their CSR strategies, businesses in the hotel industry cannot only reach the niche market segment of green travelers, but they can also reinforce the atmosphere of partnership and fair treatment within the industry (Bohdanowicz et al. 2011). As a result, hotels have the opportunity to enhance their employees’ job satisfaction (Spector, 1997) and organisational commitment, while also attract and retain skillful employees, thereby creating long-term value for their organisations.

Reporting creates value to the destination

The hotel industry has a vested interest in protecting the environment as its success heavily depends on the attractiveness of its natural surroundings (Chan and Wong, 2006). Since many hotels are located in major cities and are often located near cultural or natural heritage sites, by attracting travellers they impose an ecological footprint (Kirk, 1995). However, given that an unspoilt environment is a vital for the attractiveness of any tourist destination, hotels must ensure the long-term environmental sustainability of tourist activity. Thus, by adopting sustainable business practices and by reporting their footprint, hotels can monitor their performance; reduce their impact upon the environment across the value chain, thereby assisting destinations to become more sustainable.

The World Tourism Organization (1981) has defined sustainable tourism as “tourism which leads to management of all resources in such a way that economic, social and aesthetic needs can be filled while maintaining cultural integrity, essentials ecological processes, biological diversity and life support systems”. Given the fact that the ultimate goal of the hospitality industry is to shift unsustainable tourism development to a more favoured position hotels are nowadays choosing to report their footprint impact next to their financial results. A report by the United Nations Environment Program (2011) has identified tourism to be amongst the ten economic sectors which are the driving force behind the transition to a green economy, which aims to reduce environmental risks and ecological scarcities and increase human well-being and social equity.

By reporting on the triple bottom line, the hotel industry can measure and monitor the economic, social and environmental impacts generated by tourism. The OECD’s Toward Green Growth report (2012) suggests that market instruments, such as sustainability reporting, boost green innovation and address the externalities associated with environmental challenges. Through the reporting practice, hotels can adopt and develop green innovations which will enhance their resource efficiency and lower the costs of addressing environmental challenges. Measuring thus a destination’s footprint, will in turn result in the development of a decision-making framework aiming to achieve sustainable development in any given destination. As a result, by reporting sustainability, hotels and other facilities in the hospitality value chain can create value to the destination itself.


The rise of CSR, which suggests that business should become more sustainable by minimising their environmental impact and more accountable towards their stakeholders, is confirmed by the fact that nearly all international companies have CSR policies in place (Franklin, 2008). Being amongst the world’s fastest growing sectors (de Grosbois, 2012) and given that the conservation of natural surroundings is a vital factor for their success, the hotel industry could not afford to stay affluent upon these new demands. Thus, after having acknowledged the value of the sustainability discourse in the corporate strategies of business organisations world-wide, it is no surprise that several studies have indeed reported an increase in sustainability reporting throughout the hotel industry (Dwyer, 2005; Assaf et al. 2012; Legrand et al., 2012a; de Grosbois, 2012).

In principle, hotels, have many viable opportunities to engage in environmental sustainability. The main drivers in adopting transparent business practices which focus on ethical values, social equity and environmental conservation, are the growing stakeholders’ demands, the decrease of operating costs, the differentiation of products and the enhancement of the brands’ image. As a result, issues pertaining the implementation and reporting of sustainability are very relevant, timely and critical for the sustainability of the tourism industry (de Grosbois, 2012) in the critical financial times most countries are experiencing

Due to the higher-than-normal consumption of resources and the negative impact upon the environment, hotels have strong economic incentives to employ sustainable business strategies and to communicate their environmental performance to both their shareholders and stakeholders. By drafting sustainability reports, hotels can offer greater transparency and reveal their accountability through their environmental and social performance results. In addition to that, the effort to report can promote and create value not only for businesses in the hotels sector, but also for the destination itself, as it will lead to increased tourism innovation and therefore better hospitality products. It is therefore suggested that the sustainability reporting practise in the hotel industry will grow even more in the near future and will become a valuable tool for hotels worldwide for gaining a competitive advantage and improving performance levels.


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