Enhancing sustainability by managing environmental and social risks in the hotel and resort industry of Guangdong

Abstract

The introduction of environmental and social issues into the boardroom is one of the greatest challenges of our time. The threat of climate change adds urgency to the challenge, with the costs of inaction on climate change estimated at between 5 to 20% of global GDP, leading to a global recession. In terms of managing environmental and social concerns, the tourism industry, and the hotel and resort industry, has lagged behind other industries such as utilities, chemicals and banking and investment. Globally an estimated 5% of all CO2 emissions can be attributed to tourism. Energy use in hotels is disproportionately high, thanks to energy intensive facilities such as spas, laundries and swimming pools. The global hotel and resort industry can thus make significant contribution to reduce human impact on the global climate. This research develops a tool which helps the hotel and resort industry identify and manage non-financial risks such as environmental and social issues, and improve sustainable development of individual businesses and the sector as a whole. The research focuses on Guangdong Province, China, the richest province in China in terms of hotel stock, hotel revenues and hotel employees. China herself will be the world’s biggest tourism market by 2020 and given its future growth forecasts is an important venue to study sustainable development. Recognising the difficulty in precisely measuring aspects of social science such as non-financial risk and attitudes towards non-financial risk, the conceptual framework for the study uses the idea of a working non-financial risk management approach towards the production of a set of working propositions useful for business. The study first identifies stakeholders; develops a non-financial risk management methodology to identify, measure, examine and prioritise risks, and then presents the conclusions as working propositions for corporations to use. Recommendations for industry are developed and presented. To achieve the development of the non-financial risk management tool, the research draws a fresh link between risk management, corporate environmental management, sustainability and non-financial risk management. Second, through three research studies, a detailed investigation into the use and practice of sustainability and non-financial risk management is undertaken across 15 hotels in Guangdong Province. The first study is a comprehensive set of detailed in-depth interviews with 79 industry-specific stakeholders. The interviews are coded and the results used to develop the second study, a questionnaire survey of 351 hotel guests and 70 industry-specific stakeholders. A third study executes in-depth case-studies and non-financial risk benchmarking across 15 hotel and resort facilities. The results of all three studies are triangulated for better accuracy and understanding. The study presents a number of working propositions for corporations to adopt as starting points for their own non-financial risk management strategies. It is found that there is generally low awareness and application of non-financial risk management in the hotel and resort industry in Guangdong. The industry-specific stakeholders and guests have very different priorities in terms of non-financial risk management, while resource conservation does emerge as the leading issue amongst industry-specific stakeholders and hotel guests. Cost savings are found to be the main driver for implementing non-financial risk management, while cost of implementation is the main barrier. Through a factor analysis, it becomes clear that two distinct factors are at play in the guest domain: guests’ own well-being and self-need; and wider social or environmental concerns. The study recommends a multi-stakeholder partnership as a value-added framework for public policy, and recommends further research into stakeholder theory in China’s hotel and resort industry.