Corporate Social Responsibility and the Hospitality Industry - Essay Example

Good Hotel Name Institution Executive summary The case study involves Good Hotel which is managed by Joie de Vivre (JdV). First, it explains the characterisation of JdV’s strategy for Good Hotel and importance of commitment of corporate social responsibility to the hotel’s competitive strategy. Second, it compares Good Hotel strategy with Accor and Hyatt hotels as its major competitors, and finally, it examines the benefits and disadvantages of social conscience in hospitality business. Characterization of the hotel is based on the following factors: customer loyalty, well defined and original brand, uniqueness of its products, and good touchstone for personality. In addition, the commitment of the hotel social responsibility is important to the competitive strategy at it is the most effective way of achievement of the strategy of the hotel while honouring the ethical values, respecting the communities, people and natural environment. In comparison of the hotel with its major competitors, Good Hotel competitive advantage is based on brand originality in California, Accor Hotel competitive advantage is based on a unique international business model and it is the only group of hotels that is active in all segments of the market. Hyatt hotel group competitive advantage is based on its target on distinct customer segments. Research has shown that social conscience is has significant benefits to hotel industry. However, the main disadvantage of social conscience is based on unfairness in its implementation in regard to the size and profitability of the hotel. Characterization of JdV’s strategy for Good Hotel Brand and importance of commitment of social responsibility to its competitive strategy Pricop (2012) views characterization of a strategy of a business as very essential in order to understand the compatibilities that will result to a competitive advantage. Since the current market dynamics in hospitality industry are high, the success of the business will require a relevant strategy with a higher degree of uniqueness. The characterization factors that are taken into consideration in Joie de Vivre’s strategy in regard to Good Hotel brand include hotel image, well defined brand, efficient marketing, efficient operational control and managerial competencies, financial potential, as well as a well-managed customer relationship and information system (Pricop, 2011). This characterisation is based on the Good Hotel strategy considers its well defined brand as the largest hotelier in the state, knowing their customers in California better that their competitors, customer loyalty on the basis of the originality of their brand, unique product as well as a good touchstone for personality. The commitment of the hotel to corporate social responsibility is very crucial to its competitive strategy. As porter and Clark (2006) notes, social corporate responsibility is one of the most effective ways in a modern world for achievement of the strategic goals of a company through consideration and honouring the ethical values as well as respect of communities, people and natural environment. Thus, it is essential for the Hotel to develop a responsible business conduct in a way that it will not harm the market place, the community that it is operating in, its employees as well as the natural environment (Roberts, 2007). In this case, Good hotel has been able to choose philanthropic activities that also benefit it and assist the hotel in achievement of its strategic goals. Thus, through the activities that serve the community, the perceptions of the clients and the community in regard to the hotel are enhanced leading to attraction of more customers and maintenance or improvement of its competitive advantage (Lantos, 2002). The commitment of Good Hotel can be explained by consideration of the five principles of corporate social responsibility. Based on adhering to core values of integrity, commitment, quality, and innovation, the hotel is commitment to fair dealing and ethical behaviour in all relationships. This is enhanced by ensuring that it is doing well to all. Based on the philanthropy as well as community betterment, the hotel is engaging the local community by ensuring that the guests donates $1.5 per day automatically through One Brick as a way of charity work to the local community. In regard to conservation of resources as well as sustaining of environment, the hotel has established green dreams portal managed by the green committee in order to ensure its initiatives in environment by focusing on the following four main areas: waste reduction and recycling, conservation of energy, prevention of pollution and conservation of water. Through the green website, the hotel is able to show its efforts towards preservation of environment to its customers. Through the principle of supporting and enhancing workforce, the hotel is maintaining effective safety programs in the workplace and assisting its employee in career development. For instance, Janusz, the general manager is working hard to ensure the employees gain enough knowledge in order to ensure that they understand the green programs and safety programs. This will ensure that they in a better condition of explaining to the guest as well as answering any question that is relate to safety and green programs. Based on promotion of diversity and inclusiveness, the general manager is training her employees in order to enable them to integrate corporate social responsibility in the hotel in an effective way. She does this by providing the necessary information to the employees in order to make the teams more diverse and effective towards improvement of the competitive advantage of the hotel. Thus, as Paton (2007) notes that the actions of any business have impacts to the local as well as global community; the hotel is focusing on the five principles of corporate social responsibility to ensure that its responsibility has a positive impact to the local and global community, customers as well as the hotel. This is enhanced by focusing on duty of the hotel in order to: operate in an ethical and honourable manner; provide to the staff favourable working conditions; encourage diversity in the place of work; be active in the issues regarding to the conservation of environment; and for the betterment of the local community as well as the entire society through community service and volunteering. Comparison of Good Hotel strategy with its major competitors Good Hotel strategy is based on the concept of “Ode + Ready Made” which embodies five key words: happy, hip, humble, conscious, and inventive. The hotel strategy has been focusing on maintaining its brand as the first ‘hotel with a conscience’ with more focus on a positive attitude towards environmental sensitivity. It has also been maintaining its regional focus as the largest hotelier in California, where the largest percentage of its customer comes from California. Good Hotel is also maintaining its brand through creation of original hotels where each product is unique (The Good Hotel, 2012). Thus, the strategy of Good Hotel is regionally and product-line line focused with a positive attitude towards environmental sensitivity. The strategic focus on Accor hotel is on a unique and a universal business model as an international owner, franchisor, and operator of luxury hotels in all the five continents. Its strategy is based on the following four pillars (Woods, 2010): A unique operational expertise derived from the skills and capabilities of Accor in three businesses that are strategically aligned: hotel operator, owner and franchiser focusing on all segments in all regions. Powerful marketing approach with revitalization of the Accor brand and Economy Hotels activity Value-creating strategy of asset management which improves the business performance of the group, supports growth and optimises its balance sheet Development strategy whose aim is consolidation the current leadership of the group in Latin America and Europe and position it among Asian pacific leaders. The brand information ranges from luxury hotels to budgetary hotels and it is the only group of hotels that is active in all segments of the market. It focus is also to assert its brands strength in order to cater for new expectations. With bolstered brands, the hotel is also aimed at expansion through attraction of more franchises. Accor is also focused in improvement of communication with intermediaries in order to ply a determining role in brands commercialisation. In terms of environmental sensitivity, the corporate strategy of the Accor is driven and owned by employees which are a key factor of ensuring high engagement of people in taking the green agenda of the hotels to the heart (Sonya, & Kuehnel, 2010). Accor is focused on involvement of employees with a range of activities from payroll giving and recycling through regular participation of community events. These include local community and environmental projects such as river cleaning and tree planting. Thus, the strategy is focused on leading hotel operator and market leader in the world based on four pillars of a unique operational expertise, powerful marketing approach, and value creating and development strategy by considering all segments in all regions as well as ensuring social and environmental sensitivity. Hyatt Hotel Group strategy involves focusing on making a difference in hospitality in the lives of people every day by becoming the most preferred brand in each customer segment. It also focuses on commitment to community through creation of initiatives that focus on education, environment and more (Hyatt Corporation, 2011a). Its strategy in marketing is designed to build and secure brand value and awareness while ensuring the specific business needs of the operations of the hotel are met. The strategy also focuses on building and differentiating Hyatt’s brand position as it is fundamental to increase its brand demand and preference, rate premium as well as related business imperatives. The focus of the strategy is also based on targeting distinct customer segments where each of the brands (Hyatt Corporation, 2011b). The corporate social responsibility of Hyatt is focused on greening hotel operations and design where it has developed internal sustainable designs for new hotels as well as the existing ones. Its main focus is on reduction of energy consumption, reduction of greenhouse gas emissions, reduction of water consumption, and reduction of wastes that is sent to the landfills every night. Thus, the strategy of Hyatt hotel focused on making a difference in hospitality in order to build and secure brand value and awareness while targeting distinct customer segments where each of the brands serves as well as greening hotel design and operations. In comparison of Good Hotel with Accor hotel and Hyatt hotel group as the major competitors, Good Hotel competitive advantage in regard to its brand in California only. This has led to maintain of the loyalty of its customers in California due to the originality of the brand. However, Good Hotel lacks competitive advantage internationally. Accor Hotel competitive advantage is based on a unique and a universal international business model with brand information ranging from luxury hotels to budgetary hotels where it is the only group of hotels that is active in all segments of the market. Hyatt hotel group has a competitive advantage of building a brand value that targets distinct customer segments. Benefits and disadvantages of social conscience in hospitality business Orlitzky, Schmidt, & Rynes (2003) indicated that implementation of social and environmental initiatives in hotels can gain economic benefits with little or no capital. Furthermore, they add that apart from cost benefits, there are also benefits associated with the strategy for environmentally sustainable energy. Such benefits include customer loyalty, gaining competitive advantage by leading in the sector, awards and recognition, risk management, employee retention, regulatory compliance, and increased brand value. Above all the most significant benefit is that incorporating social conscience is the right thing to do. With the green practices that the hotels have been pursuing, the main reason is to prevent fluctuating economic levels and to have a strong focus on customer service. Most green practices implemented by hotels acts as preventative measures in saving unnecessary costs. Such practices include energy consumption, prevention of pollution and recycling. The results of such actions lead to a win-win situation which includes reduction of operation costs of the hotels as well as reduction of harmful environmental impacts. According to Preston, & O’Bannon (1997), financial savings is a significant factor that drives the implementation of social and environmental initiatives in hotels. This is the case for the hotels that experience a high market competition especially where the energy, waste disposal and water costs are high. The competitors who manage to maximise their efficiency as well as reduce their waste will end up being more cost-effective in comparison with their competitors. Such initiatives on environment and cost savings include installation of shower heads with low flows, replacement of leaky pipes for steams for energy conservation, and installation of an energy management system in a room. Although there are set up costs, the lengthy turn in regard to investment in relation to initiatives on environment, the cost of implementation is usually outweighed by economic benefits. This starts with such projects that require lees capital intensive, for instance, energy metering, retrofitting light bulbs as well as training of employees on the conscious energy use. These initiatives will lead to substantial saving on costs. According to Orlitzky, Schmidt, & Rynes (2003), green programs are a significant source of competitive advantage to hotel leaders give that green activities will continue being voluntary. This means that hotels that adopt business models that encourage green practices have the greatest opportunity of achievement of a competitive advantage by always being ahead in sustainability curve. Burton, Farh, & Hegarty (2000) noted that employees are the greatest benefits when the hotels go green. Employees are sophisticated into current thinking in regard to the society and have the likelihood of identifying together with the employer the principles and practices that are aligned with their values. Environmental programs have shown efficiency in motivating employees and generating enthusiasm in working as a team to achieve a particular goal. As a result, the turnover rate of employee in hotel industry is high; therefore, the rate of retention will save money for recruitment and training of new employees. Preston, & O’Bannon (1997), argue that customer loyalty is important in contemporary hotel sector. Implementation of environmental initiatives may influence the choice of customer for a hotel. Despite the first-time guests basing their decisions on amenities, location and services, customer loyalty may also significantly increase once the customers get an experience of a hotel with demonstration of environmental commitment. Hotels must also predict any changes in regulations in future and come up with initiatives that mitigate any cost effect that may arise from emerging regulations. Most of environmental regulations are important for economic competition as they simulate innovation that eliminates costs of compliance. Thus, by being aware pending changes in rules, the hotels will be in a condition of adopting advance measures and avoid the potential for higher costs in future (Story, D. & Price, 2006). They add that risk management is interconnected with good corporate social responsibility as well as governance. There is emergence of social and environmental issues as the major risk issue in lodging sector such as water contamination, waste management, and noise and air pollution among others. Furthermore, the investment community is increasingly considering environmental management and performance excellence and a sign of aptitude and quality of management. Thus, it is important for hotels to integrate environmental in their decision making in order to reduce potential liabilities and environmental risks. Burton, Farh, & Hegarty (2000) argue that the greatest benefit of incorporation of social conscience is because it is the right thing to do. Many social and environmental initiatives are voluntary. Whether driven by a principled strategy or cost savings, the hotel industry is now realising that the community, environment as well as the human capital are valuable resources that need protection as the long-term sustainability depend on them. Research has proved that social conscience is a marketing tool for hotel industry. However, the main disadvantage of social conscience is ensuring fairness in implementation of corporate social responsibility within the community. Although social conscience leads to long-term benefits, hotel especially the large ones usually take advantage by first avoiding the implantation of the system in order to gain huge profits while their competitors are spending in implementation of the system. Other hotels also buy carbon credits from the ones conserving environment and continue with exploitation of resources for bigger profits (Balmer, Fukukawa, & Gray, 2007). 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