Introduction
Time was, revenue-obsessed executives and owners used to disregard the social and ethical components to their business. There has come a time when business has become the environment- and society-centric. In order for commercial ventures like resorts to stay competitive in their sector retaining and multiplying the market share, they should focus on sustainability. As demonstrated by Alila Hotels & Resorts, companies can make nature conservation efforts and undertake civil initiatives garnering a massive public support. Towards these ends, resorts can employ local residents, thereby increasing their welfare, train personnel, support the organic food cultivation and local crafts, open and maintain school and orphanages, and engage in other endeavors. Tourists and guests are more than happy to take part in green initiatives, which makes for a more joyful and event-crowded experience and the eventual cultivation of consumer loyalty. While shareholders drive direct financial benefits from such loyalty, sustainability requires intense investment and time for inputs to pay off, which can be problematic due to different fiscal perspectives stakeholders can take. Services getting costlier and intense sustainability propaganda can lead customers to grow alienated from the product. Worse, some resorts can use corporate social responsibility as a means of achieving economic and political objectives. While sustainability has plenty of benefits to offer to communities, the environment, consumers, and even shareholders increasing the legitimacy of business, it may discourage guests and shareholders interested in a quicker return on investment.
Sustainability Advantages and Disadvantages
Stakeholders and Legitimacy: Sustainability Is a Magnet for Visitors and a Boon for Local Communities
Analyzing resort sustainable management, Deegan and Unerman (2011) presented stakeholder theory approving the identification of stakeholders of a company, defining and recommending approaches to giving proper regard to the interests of this category of business actors (cited in Charlet n.d.). Put differently, sustainability must defer to the interests of stakeholders, apart from protecting nature. Indeed, he who produces and maintains conditions for nature and people to coexist in productive harmony supportive of present and future generation pursues sustainability successfully (EPA 2015). Related to stakeholder is legitimacy theory. According to Deegan and Unerman (2011), legitimacy theory suggests that companies look to function within the norms of their societies making sure stakeholders consider their activities legitimate (cited in Charlet n.d.). Now it remains to be identified who the principal stakeholders of resorts are and how exactly sustainability benefits them.
Since going green or embracing the sustainability philosophy, international resorts may add to the number of tourists who may find the newfound ecological focus to their liking. Fremond (2000) stated that customers were an integral part of most stakeholder models while the broader definition of stakeholder comprised accountability to local communities and the civil society in general. Klingmann Architects and Brand Consultants (2010) claimed a holistic approach to sustainability to promote a more all-embracing understanding of cultural, social, environmental, and economic factors of a specific location and the way each of these contributes to a healthier and more sustainable lifestyle of the area and its residents. The synergetic synthesis of local beliefs, traditions, and resources strengthens the cultural legacy of locations as well as turning them into flourishing cultural centers. The communities are the holders of residents’ social values linking them to their history and culture, which appeals visitors and tourists, who have a great interest in learning and understanding local culture (Klingmann Architects and Brand Consultants 2010).
The sustainability is a proved success formula employed by countless resorts worldwide. Tuppen (2013) interviewed Mark Edleson, the president of Alila Hotels & Resorts who admitted that sustainable development through the prioritization of community and conservation has remained the cornerstone philosophy and a unique holistic vision of the hotel network as a prerequisite for a long-term commercial success. The Alila Hotels & Resorts influences the community positively through the balanced cultural, social, and economic management by using local suppliers, providing local residents with employment, and developing the workforce via skill training. Alila Villas Uluwatu on the island of Bali shows a great commitment to the Bali Life Foundation, which is an orphanage that provides healthcare, education, and accommodation to children ages 5 to 15 (Tuppen 2013).
Being also a food sponsorship program, Alila Villas Uluwatu is assisting with building a new house giving residential space for 60 children. The resort and hotel group has initiated a training program that facilitates children’s transition from school to work plying them with technical skills needed for employment. The Gift to Share program is a much-promising initiative, by which the company vows to donate for local causes with every booking. For example, Alila Diwa Goa provides an undisclosed amount of money to a local school for every booking of its special opening packages. Alila Ubid, also a part of the hotels & resorts group, has gained popularity due to its dedication to locally sources organic production, which has created a market opportunity for residents who can make a shift from chemical animal husbandry and farming to organic analogues all the while improving their own wellbeing (Tuppen 2013).
Another example comes in the shape of organic farm Sekem established in Egypt. Farming techniques allow the reclamation of arable land from Sahara that is quick to proliferate into the delta of the Nile River. Soil also reportedly absorbed CO2 from the atmosphere reducing greenhouse gases. Owing to the introduction of sustainability principles, cotton crops started taking 20% to 40% less water to cultivate than they did before (Haanaes, Michael, Jurgens, and Rangan 2013). Egyptian resorts can cooperate with local communities exploiting large swathes of land for organic crop cultivation creating jobs and curbing climate change. So can the holistic approach to sustainability perform a dual function of keeping local communities satisfied and stirring interest among visitors. It must be difficult to hear local residents denounce the resort group as illegitimate considering the number of initiatives and the intensity of cooperation with the community.
More specifically to how sustainability connects with tourists gaining popularity, all the Alila group aspires is for the visitors to become absorbed in the local culture and gain a sense of belonging. At Alila Villas Soori on the west coast of Bali granted the status of UNESCO world heritage, the All about Rice journeys take place in the midst of the rice paddy fields. By participating in such, guests can learn about the crucial place rice has in the identity and culture of the Balinese. At Alila Villas Uluwatu, visitors showing interest in architecture can learn captivating facts about the principles of local environmental design, which they do by exploring the local design principles and vegetation, practicing composting, planting the trees of their own, and participating in a flora nursery programme. The experience goes in tandem with lunches or breakfasts at sunrise in superb natural settings, which makes for a very insightful and luxurious travel experience. Guests are free to visit locally maintained community projects. While at Alila Ubud, guests can visit farms oriented on organic produce supported by the Alila group (Tuppen 2013).
In the west, sustainability is about as efficient an attraction instrument as it is on the above-quoted exotic islands. Hetter (2013) suggested that hotel guests were happy to be able to be a part of green initiatives during their stay. The analysis conducted by Giebelhausen of 2011 data from the J.D. Power and Associates North America Hotel Guest Satisfaction Study demonstrated that, of 90% of guests staying at hotels, 60% proved eager to engage in sustainable initiatives when offered a chance. Despite them ostensibly getting a lower level of service, participation in sustainable programs rendered green program partakers more contented with their stay than it did those who refrained from participating. Nonparticipation led guests to report the lowest satisfaction levels possibly since the failure to live up to life ideals caused a moral dilemma (Hetter 2013). If this reason be the case, plenty of tourists appear to have an aspiration after sustainability during their stay at hotels. A happy guest is a revisiting guest, that is to say, satisfaction galvanizes happy customers into revisiting and translates into higher incomes, which cannot but be in line with the financial expectations of the specific groups of stakeholders.
Benefits to Other Stakeholder Categories or Reasons for Them to View Resorts as Being Legitimate
Fairmont Hotels & Resorts (n.d.) listed five different categories adding employees, the environment, shareholders, and property owners to customers. As far as such stakeholder as the environment is concerned, the Fairmont endeavors to concentrate performance on water, energy, and chemicals to minimize the adverse impact on the ecology and improve its state. Careful purchasing and a reduction in emissions and waste are priorities (Fairmont Hotels & Resorts n.d.). To quote a related example, the Singapore branch of Alila Hotels and Resorts has been carbon neutral since policy inception in 2008 creating a sustainable business model for others to follow. Alila Villas Uluwatu is the first resort to have been built on Bali, with Earth Check standard applied in the process. The resort corporation launched Alila Villas Soori a year later, which is in 2010, complying with identical strict operation and design principles. All company hotels have the Earth Check certificate signifying their materialized dedication to sustainability. On the east coast of Bali is Alila Manggis where the company is maintaining its interactive Green Bank project considered an enormously successful community recycling initiative intended for giving the village and resort area a more responsible and greener outlook. It is to the project that local residents owe the opportunity of introducing recycling schemes and creating children playgrounds and community allotments for home craft industries and the cultivation of vegetables and fruit, which they go on to sale to the hotel and resorts company. Thus forges the company important bonds with local dwellers (Tuppen 2013). Therefore, such stakeholder as the environment stands to gain from the sustainable course of resort management.
Shareholders are in need of the ceaseless flow of information on business decisions and operation, so that they may gain a full understanding of business practices and the timeline of return on their investment. Just as shareholders are interested in returns, so too are property owners. The Fairmont, for one, has established a communication line with property owners whereby to design innovative solutions for environmental and economic growth (Fairmont Hotels & Resorts n.d.). Dissart, Dehez, and Marsat (2015, p.133) noted that multiple ownership complicated joint managerial vision. The lack of connections among different stakeholders within resorts makes customers buy and cover services independently, with service length, experience and other factors being different, as is often the case in French mountain ski resorts (Dissart, Dehez, and Marsat 2015, p.133). What to take away from this view is that both shareholders and property owners are return-oriented and that both can have scarce connections.
Why Sustainability May Be a Bone of Discord among Stakeholders. When Guests and Asset-holders Are none too Happy with Sustainability
Stakeholders owning resort stocks or assets may welcome sustainability as an important stimulus of revenue, but then again, while sustainability economizes on the environment by saving its precious God-given wealth, it may hurt the financial interests of whomever co-owns a resort. Scarce connections among financial stakeholders means that they may be far from unified. What is good to one group of stakeholders may be not to another. Some visionary shareholders can see a long-term prospect in investing in sustainability while others may be unwilling to wait for significant financial input to bear dividends, or they may have nothing left but to push for a quicker return on investment due to bank loan interests, stipulations, and deadline. Unfortunately, profit orientation may be a predominant trait of modern business, and the majority in the board of directors of a fashionable international resort may not be swayed by the opinion of sustainability-minded colleagues. Eisenstein (2014) argued that, in 90% of cases, profit interests outrageously came into collision with those of the planet and its inhabitants.
International Institute for Sustainable Development (n.d., p.5) stated that, at the beginning of the 20th century, the strategies of companies was such that it required that maximum return for investors and shareholders be a priority. The achievement of no environmental or social objectives was expected of commercial ventures. Consequently, the exploitation of human and natural resources in plenty of industries used not to evoke any concerns. Nor was the lack of dedication to the wellbeing of communities, in which a venture was operating, unmoral. In a word, companies accounted to no one other than their owners (International Institute for Sustainable Development n.d., p.5). It may be that some of resort shareholders have the early 20th century mentality of income maximization and zero corporate social responsibility mindset. Whatever the reason, sustainability does require considerable funds before it starts bringing benefits. Different disadvantages to financial interest groups and consumers stand behind sustainability.
The expensiveness of sustainability business practices can cause companies to reconsider their employment in the light of insufficient demand for green products (Kahle and Gurel-Atay 2014). Disillusionment and the lack of interest may follow resorts’ attempt to shove their sustainability down consumers’ throat through heavy advertising. Joseph (2016) asserted companies could make poorly grounded claims as to their eco-friendliness engaging in what has come to be known as greenwashing, which does their credibility an ill favor culminating in consumer backlash. Lastly, the primary disadvantage of company conversion to a green enterprise is the cost, at which the process comes. A shift to solar power will make it necessary for a company to install solar panels. A cutback in costs related to energy saving in the aftermath of sustainability transition do not always prove sufficient to compensate the original costs of the shift. What with costs, companies can produce too expensive a product for a customer to purchase.
Corporate Social Responsibility Theory. When CSR May Serve as a Shield Hiding the Actual Purpose of Resort Owners. A Controversial Symbiosis of Sustainability Pros and Cons
There is a third theory that is possible to apply to sustainability just as well, which bears relation to corporate social responsibility categorized into four groups. According to Garriga and Mele (2004, p.51), ethical theory relates to the ethical responsibilities a company has to the society. Integrative theory implies that companies concentrate meeting social demands. However, based on political CSR theory concerns the power of companies in the society and the accountable application of such power in the political arena. As per the instrumental theory followers, companies are regarded as the only tool for wealth generation, and its social activities are nothing but a way to accomplish economic outcomes (Garriga and Mele 2004, p.51). When social activities of commercial ventures like resorts are a mere instrument of income generation, as they attract tourists, such pro-sustainability attitude reflects an opportunistic and pragmatic approach that has little to do with noble social aspirations.
In theory, there is nothing particularly bad about the commercial expectation of investment in local sustainability. However, when the CSR of a certain international resort network has lived up to its original purpose, which may be bringing company owners or their protégés to the political scene giving power leverage, the company may be starting to phase out the responsibility out of its business doctrine. Carson (1993) referred to Friedman, the developer of CSR theory suggesting that business executives need to spare no effort to fulfill the wishes of shareholders through profit maximization as well as abiding by the ethical customs and laws of the society. Ideally, that is a compromise between two principal stakeholder groups, such as investors or shareholders and the society, especially when such stance is a genuine intention of developing the regional community and conserving the environment.
Conclusions
Sustainability has a great potential benefitting a variety of resorts’ stakeholders. Consumers spend a wonderful time familiarizing themselves with local cultures supported by resort owners and asset-holders. Local communities have school and other institutions built, craft and industries assisted, and residential space built by service businesses like resorts. Conservation efforts allow companies to preserve the environment, one of the major service sector stakeholders, and reduce the potentially hazardous impact of the tourist venture. Since consumers are left perfectly satisfied after taking part in green initiatives, income is on the rise, which meets the expectations of owners and shareholders. Still, not all shareholders are fine with expecting their input to generate long-term profits. Even consumers may lose their interest in services provided by resorts given sustainability propaganda overexposure and the cost increased by the transition. More importantly, some of businesses use sustainability as a springboard for profit maximization and the advancement of political interests. While benefits exceed the fallouts of the sustainable vector of resorts’ development, there is no forgetting sustainability may be as useful to the same category of stakeholders as it may be detrimental. The success of the green transition may depend on the unity of shareholders and owners, their investment return expectations, the scope of shift determining the costliness of services a resort provides, and other related factors.
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