If you follow Amsa Hospitality' posts, you already know that our company is built on a strong Corporate Social Responsibility (CSR) business model.
Our aim is not only to be recognized as the “hallmark of Arabian hospitality” (which we are!), but also as a ‘citizen company’:
As any corporation, we want to grow and be profitable.
More than that, we want to do it the ‘right’ way.
This is why we decided to become and be acknowledged as a full fledge citizen company.
If everyone heard of CSR, not everyone knows exactly what it is about. Let’s ask Investopedia:
“Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental. To engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment instead of contributing negatively to them.”
A 2016 study, from the Asian Journal of Sustainability and Social Responsibility, demonstrates that executives aware of their companies Corporate Reputation (CR) must consider CSR as a necessary development tool, as it represents a competitive advantage when well managed. On the other hand, the study explains that “actual understanding of this concept and its relation with service quality in the hotel context is limited”.
What’s more, a 2021 study titled “The impact of hotel CSR for strategic philanthropy on booking behavior and hotel performance during the COVID-19 pandemic” highlights the dangers of CSR when not properly comprehended and managed. The authors of the study explain that during the “pandemic, some hotels have engaged in Corporate Social Responsibility (CSR) activities to help overcome the crisis”. Overall, it didn’t work, as many customers perceived the new CSR engagement as an opportunistic ‘strategic philanthropy’: “Crises like the COVID-19 pandemic tend to test for the genuine commitment of companies to authentic CSR. This is because financial strains during crises are likely to push businesses to pursue short-term gains and reduce long-term investment, such as investments in CSR. Engaging in CSR during crises is a way for corporations to generate the ‘reputational capital’ and enhance firm value,” the study adds.
If the market sees or feels that the commitment isn’t genuine, the response may be extremely damaging, first in terms of Corporate Reputation and soon after financially due to business loss.
In other words, for a CSR commitment to work and be profitable, it needs to be genuine.
The study goes further, explaining that “CSR has a wide range of benefits to businesses including enhanced profitability, reduced operating costs, increased staff commitment, improved relationships with communities, enhanced reputation and market value, and positive image of the firm. (…). Employees' awareness of CSR can reduce staff turnover, improve recruiting results, enhance staff engagement, increase employees' job satisfaction, and motivate further citizenship behaviors of employees (…). The operations of hospitality and tourism firms sometimes result in potentially unwelcome changes in local communities, these firms need also to engage in CSR activities that benefit the local communities and residents (…). Importantly, CSR activities result in cognitive, affective, and behavioral consequences for customers. CSR has been regarded as a significant attribute of brand image, which can positively influence customer decision-making: Hotel CSR has a positive impact on customer related to their hotel selection behavior, brand satisfaction, and brand loyalty. In addition, the perception of hotel CSR activities has a positive impact on the hotel's brand equity via brand image, brand quality, brand awareness, and brand loyalty.”
This latest study says it all: Corporate Social Responsibility is not only a company making a good deed, but more notably a proper management move to ensure firm’s long-term success.
Of course, all global hospitality groups jumped into the CSR bandwagon, understanding clearly that being a citizen company is a must in today’s world. All around the planet, they all implemented programs, training sessions to develop employees and guests awareness, and increased dramatically their communication budget related to CSR (always being careful to not go too far, to avoid the pitfalls of greenwashing).
Nevertheless, the hospitality industry hardly makes the top 100 sustainable list: In 2020, the Wall Street Journal assessed more than 5,500 listed global companies about their leadership and governance practices (CSR) for their ability to create value for shareholders over the long term. Interestingly enough, only two hospitality groups made the list:
Meliá Hotel – (7th) Gabriel Escarrer Jaume, Vice Chairmant and CEO of Meliá Hotels International, said that sustainability is at the core of their business. He explained that the management model of the company is designed to make “sustainability an intrinsic part of the business… given the need for companies to generate a positive impact on society and the planet.”
Genting Group – (14th) This Kuala Lumpur, Malaysia, based hospitality group frequently reports a “triple bottom line” to cover the financial, environmental, and social impact of the company. Dato Sri Lee Choong Yan, President, Chief Operating Officer & Executive Director of the Genting Group, said that the company “has made environmental protection and preservation an integral part of its corporate philosophy and business policy since its incorporation”.
Since this WSJ article, major hotel groups increased their efforts. But apparently, not enough: A 2022 report from S&P Global, that assessed 7,500 companies worldwide and listed the 700 best, placed the first hospitality group to make the list, Hilton Worldwide, 74th, followed by Meliá being 156th, and NH Hotel Group being 364th!
Obviously, the hospitality industry has difficulties defining and implementing a successful Corporate Social Responsibility strategy. Why is that? Certainly because it is more challenging for our industry to be a citizen company as it entails so many parameters: “In the hospitality industry, the key CSR issues are environmental management (i.e., energy, water, and food waste), carbon footprint, eco-efficiency, responsible sourcing, working conditions / staff turnover, stakeholders’ engagement, human rights, cooperate governance and anti-corruption measures”, explains the Vrue University in Amsterdam.
Despite all these difficulties, hospitality groups are trying hard to become ever better.
Interestingly enough, from the top five hospitality groups in the world (listed randomly here as the ranking changes almost every day - Marriott, Hilton, IHG, Wyndham and Accor), only two are listed somehow high, while only smaller groups make the list. Does that mean that the bigger the group, the most difficult it is to define and implement a proper CSR strategy?
For the hospitality industry to improve their CSR ranking, we need to work on various topics:
Staffing – we discussed the issue numerous times here
Energy - a hotel spends typically 5 to 7% of its revenue on energy – up to 10% for luxury hotels -, while savings are easily possible
Carbon footprint – the hospitality industry represents a whopping 25% of the world’s carbon footprint (WTO 2019)
Following the Paris Climate Change Agreement and the United Nation’s Global Goals, all major hospitality groups, representing more than 40,000 hotels worldwide, joined the United Nation’s Sustainable Hospitality Alliance to find together solutions for a better CSR implementation in our industry.
At Amsa Hospitality, we agree with Meliá’s Gabriel Escarrer Jaume and Genting Group’s Dato Sri Lee Choong Yan: Corporate Social Responsibility is what makes Amsa Hospitality. It is in our DNA, and all our decisions, no matter the topic and the challenges, are guided by our corporate citizenship core pledge.