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Corporate Social Responsibility in the Hospitality Industry

Christine Lynn, Ph.D. Professor and Director Isbell Hospitality Ethics School of Hotel and Restaurant Mana e!ent "orthern #ri$ona %ni&ersity P. '. (o) *+,.la staff, #/ -+0111*+,234-5 *4,141,, Christine.Lynn6nau.edu 'ctober, 4003 Re&ised Dece!ber, 4003

#bstract 7his article re&ie8s and su!!ari$es the recent literature on Corporate Social Responsibility in the hospitality industry. Many authors no8 see CSR as an obli ation of business and thin9 that business should undo social and en&iron!ental proble!s it has created. CSR acti&ities are !ost effecti&e 8hen they are related to and inte ral to the lon 1ter! success of the co!pany.

Corporate Social Responsibility in the Hospitality Industry #rticles on Corporate Social Responsibility 2CSR5 are appearin !ore fre:uently in the hospitality literature. 7he purpose of this paper is to re&ie8 the recent literature and su!!ari$e current thou ht on the topic 8ithin the hospitality industry. 78enty1t8o articles 8ere found throu h the Hospitality and Tourism Index 8hich 8as the !ain source for articles appearin fro! 4004 throu h 400;. .i&e additional articles appeared in the Journal of Business Ethics and t8o !ore in the Harvard Business Review. 7he articles 8ere read and placed in cate ories e!er in fro! the literature. Introduction More hospitality !ana e!ent positions are bein ta9en by raduates of hospitality !ana e!ent pro ra!s than e&er before. 7he holders of de rees in hospitality !ana e!ent thin9 of the!sel&es as professionals enterin the profession of hospitality !ana e!ent. Professions re:uire speciali$ed 9no8led e and s9ills, continuin education 8ithin the profession, and !ust be ood for the co!!unity and society. <hile professionals !ay recei&e lar e salaries, for an endea&or to be a =profession> it !ust

, ha&e oals beyond hi h pay and be concerned 8ith the lon 1ter! ood of the co!pany and also the co!!unity the co!pany does business in 2?as$ay @ Dun9, 400+5. 7he hospitality industry is !ade up of !any co!panies 8ho are run by business people. (usiness people 8ho put short1ter! profits ahead of concern for the lon 1ter! health of the co!pany or 8ho !a9e additional profits by failin to spend the !oney necessary to handle to)ic 8aste or pollution resultin fro! the !anufacturin process, are not professionals and har! the reputation of the industry as a profession 2?as$ay @ Dun9, 400+5. 7he scandalous beha&ior of so!e business leaders in the past decade has da!a ed the reputation of business 8ith the co!!unity. 7he for!er =8hat is ood for business is ood for the country> has been replaced 8ith a &irulent distrust of bi business. Corporate social responsibility re:uires or ani$ations to de!onstrate responsible business conduct that does no har! in the !ar9etplace, in the 8or9place, in the co!!unity they operate in, and to the natural en&iron!ent 2Roberts, 400;5. 7he actions of business i!pact the local, national, and lobal co!!unity, so businesses ha&e a responsibility to ensure that the i!pact is positi&e 2Paton, 400;5. <hat is CSRA Corporate Social Responsibility in&ol&es =achie&in co!!ercial success in 8ays that honor ethical &alues and respect people, co!!unities, and the natural en&iron!ent> 2Clar9, 400+B Porter @ Cra!er, 400+5. 7here is no uni&ersally accepted definition of CSR, but !ost of the definitions ha&e to do 8ith business ha&in a positi&e i!pact on the co!!unity 2Redford, 400*5 and !eetin or e)ceedin public e)pectations of ood corporate citi$enship 2(rands that do ood, 400,5.

D Eeoffrey P. Lantos re&ie8ed the CSR literature and redefined CSR by classifyin it as ethical, altruistic, or strate ic. Ethical CSR is !andatory and !eans that a fir! !ust obey all la8s and a&oid doin har! as a result of its business. 7his could include har! caused by pollution, faulty products, and unfair labor practices. Eood la8s and o&ern!ental policies 8ill often alle&iate ethical CSR proble!s 2Lantos, 40045. #ltruistic CSR in&ol&es a fir! helpin to alle&iate e)ternal social proble!s and ine:uities throu h charitable fundin 8hether it financially benefits the fir! or not. 7his type of i&in is at the stoc9holdersF e)pense and !ay not be le iti!ate. Lantos points out that altruistic CSR !ay be fine for pri&ate co!panies as lon as it co!es out of the o8nerFs profits and not by char in consu!ers hi her prices or payin e!ployees less 8hich i!pin es upon ethical CSR. Strate ic CSR, on the other hand, in&ol&es choosin philanthropic acti&ities that 8ill also benefit the co!pany and help it to reach its strate ic oals. Carin corporate co!!unity ser&ice acti&ities can enhance consu!ersF perceptions of the business and attract !ore custo!ers. # restaurant !ay choose to support the arts to ro8 its business fro! the after1theatre cro8d. Morale !ay increase if e!ployees beco!e in&ol&ed in !eanin ful corporate &olunteer pro ra!s, 8hich can increase Gob satisfaction, 8hich, in turn, can decrease turno&er 2Lantos, 40045. Society and business are dependent on each other. (usiness pro&ides Gobs, products, and ta)es 8hile society pro&ides 8or9ers, consu!ers, and policies. "either can sur&i&e 8ithout the other so it !a9es sense for business and society to 8or9 to ether for the benefit of both rather than to continue at odds. (usiness decisions and social policies !ust be ali ned for this to happen 2Porter @ Cra!er, 400+5.

* <hat are the (enefits of CSR Pro ra!sA Business EthicsF list of the 100 (est Corporate Citi$ens sho8ed these co!panies to ha&e done better financially than all of the other co!panies in the S@P *00 Inde) 2Clar9, 400+5. 7hirty hospitality and tra&el brands listed in the .ortune Corporate Reputation Inde) 8ere found to ha&e a stron positi&e correlation bet8een CSR and profitability. 7he sa!e study also re&ealed that lar er co!panies benefitted !ore fro! hi h CSR ratin s 2(rands that do Eood, 400,5, but s!aller hotel chains and independent hotels !ay be able to i!ple!ent en&iron!ental and social policies easier than the lar er co!panies 2Responsible Hospitality in Independent Hotels, 400*5. <hile i!pro&e!ents in corporate citi$enship result in stron financial perfor!ance, !ethods to !easure the effects of CSR are still in the early sta es of de&elop!ent 2Roberts, 400;5. Co!!unity in&ol&e!ent can result in enhanced public relations as in the case of the rebuildin of LaRosaFs Pi$$eria in the Cincinnati area after a fire in 13;,. 78o hundred &olunteers 8ho had e)perienced LaRosaFs enerosity o&er the years, filled in the ap left by inade:uate insurance 8ith 8or9 and loans and sa&ed the pi$$eria fro! ban9ruptcy 2Det8iler, 400*5. # ood reputation can dra8 ne8 custo!ers and 8or9ers and help to raise staff !orale 2Redford, 400*5. Doin business 8ith co!panies that ha&e ood CSR reputations is beco!in a preference for !any consu!ers 2(rands that do ood, 400,B #ct responsibly, 400,B Clar9, 400+5. 'r ani$ational co!!it!ent to CSR is beco!in an i!portant issue for prospecti&e e!ployees, and a ood CSR trac9 record !ay be necessary to recruit top le&el candidates 2Cotterill, 400;5. People prefer 8or9in for co!panies that care. People in or ani$ations also see! to enGoy co!!unity ser&ice, so !eetin planners are no8

+ incorporatin CSR acti&ities at !eetin s 8here participants can 8or9 to ether on charitable acti&ities in the co!!unity 2Scofidio, 400;5. "ot only can CSR pro ra!s i!pro&e a co!panyFs reputation in the co!!unity, raise !orale, and i!pro&e profits 2#fiya, 400*5, CSR pro ra!s can actually lead co!panies into !ore sustainable ro8th 2(rands that do Eood, 400,5. 'peratin costs can be substantially reduced throu h 8aste reduction and conser&ation 2Clar9, 400+5, and these sustainable acti&ities are of interest and can be co!!unicated to e)istin and potential custo!ers 2Clar9, 400+5. # corporate identity can be !ana ed and co!!unicated so that CSR efforts beco!e part of its identity 2#ta9an @ E9er, 400;5. Many co!paniesF CSR efforts, ho8e&er, are less than effecti&e because they do not ta9e into consideration their oals and strate ies and instead are eneric and fra !ented acti&ities 2Porter @ Cra!er, 400+B Redford, 400*5. 7oo !any of the CSR pro ra!s are si!ply public relations ca!pai ns that do not necessarily ha&e anythin to do 8ith ho8 the business is operated 2Porter @ Cra!er, 400+5. 'ther CSR pro ra!s in&ol&e business as usual 8ithout concern for social issues and then charitable donations !ade to causes dee!ed 8orthy 2?ones, Co!fort, @ Hillier, 400+5. Co!panies are feelin pressure fro! acti&ists, custo!ers, e!ployees, and o&ern!ents to be socially responsible, and 8hile they understand the need to report on their CSR acti&ities, !any of their CSR efforts are not yet inte rated into their core business acti&ities 2?ones, Co!fort, @ Hillier, 400+5. CSR Reports '&er half of the 4*0 lar est !ultinational corporations published CSR reports in 400*, and a CSR ratin industry has e!er ed 2Porter @ Cra!er, 400+5. Researches

; analy$ed the content of hotel 8ebsites, annual reports, and CSR reports to deter!ine the le&el of social responsible beha&ior reported by the top ten hotel co!panies 2Holco!b, %pchurch, @ '9u!us, 400;5. Initiati&es for sustainable touris! and CSR in the hospitality sector ha&e been put forth o&er the past ten years by international and European or ani$ations such as the <orld 7ouris! 'r ani$ation. Increased attention, particularly in the public do!ain, is resultin in adoption of <7' ethical uidelines by !ore and !ore local associations and or ani$ations. <hile reportin CSR acti&ities does not necessarily correspond to actual CSR acti&ities, it is ob&ious that CSR is beco!in an accepted lobal initiati&e 2Holco!b, %pchurch, @ '9u!us, 400;5. Ei ht out of the ten top hotel co!panies 2-0H5, as desi nated by Hotels !a a$ine 2official publication of the International Hotel and Restaurant #ssociation5, reported i&in charitable donations, +0H reported ha&in di&ersity policies, and D0H !entioned social responsibility as part of their co!pany !ission state!ents. 7he top ten hotel co!paniesF 8eb sites and annual reports 8ere analy$ed and the infor!ation found 8as cate ori$ed into co!!unity, en&iron!ent, !ar9etplace, &ision and &alues, and 8or9force. Hilton Corporation 8as found to ha&e the !ost co!prehensi&e CSR reportin . Marriot ca!e in as second !ost co!prehensi&e and the #ccor hotel roup 8as third. Holco!b, %pchurch, and '9u9!us su ested that !ost hotel co!panies can

i!pro&e their CSR reportin and that hotel co!panies should =li&e up to their reputation of bein IhospitableF not only to their uests but also to society> 2400;5. Disaster !ana e!ent, such as needed after the 400D Indian 'cean tsuna!i, is not enerally listed on any of the CSR chec9lists co!!only a reed upon in the literature. (est <estern, Hilton roup, #ccor, Intercontinental, and Si) Senses did, ho8e&er,

co!!it o&er J4.* !illion, and other chains also pro&ided aid 2Henderson, 400;5. Henderson calls for CSR efforts to be balanced bet8een co!!ercial and nonco!!ercial priorities 2400;5. Sta9eholders 7odayFs business en&iron!ent is &ery co!ple) 8ith !any sta9eholders. "ot only is there a need to be concerned 8ith the 8ants and needs of 8or9ers, custo!ers, and stoc9holders, but there is also a need to be concerned 8ith future 8or9ers, custo!ers, and stoc9holders, and also the !edia, ratin a encies, o&ern!ents, non1 o&ern!ental or ani$ations 2"E's5, and the en&iron!ent 2Lane, 400+B (al!er, .u9u9a8a, @ Eray, 400;5. Is the business sustainable, and ho8 8ill it operate loballyA Multinational corporations ha&e the po8er and resources to i!pro&e the 8orld, but re:uire responsible leadership in order to benefit !ultiple sta9eholders 2Maa9, 400;5. Sta9eholder social capital is for!ed 8hen responsible leaders pro!ote !utually beneficial sustainable relationships bet8een all the &arious sta9eholders includin those 8ho !ay ha&e been e)cluded in the past and future sta9eholders. Sustainable relationships can foster a sense of ood 8ill as co!panies beco!e a =force of ood> for the !ultiple sta9eholders and the co!!unity instead of Gust for shareholders and !ana e!ent 2Maa9, 400;5. Society and business ha&e a direct relationship that has ro8n !ore contentious in the past decade. CSR reports are pri!arily the result of the insistence of e!ployees 8ho are de!andin assurances that their co!panies are beha&in the!sel&es, and there is a correlation bet8een co!panies that are seen as ood e!ployers and that ta9e their social responsibilities seriously 2Lane, 400+5.

3 Sustainability Sustainability not only concerns the en&iron!ent, but also has to do 8ith the ability of a co!pany to operate successfully in the present 8ithout co!pro!isin its ability to operate successfully in the future 2Doherty, 400;5. Consu!ers are increasin ly !ore concerned 8ith ho8 co!panies !a9e their !oney and are e)pectin businesses to be responsible for their social, ethical, and en&iron!ental i!pacts on society and the co!!unity 2Lane, 400+5. # =triple1botto!1line> approach adds en&iron!ental and social ele!ents to the econo!ic botto!1line for an increasin nu!ber of corporations 2Maa9, 400;B Doherty, 400;B Clar9, 400+B Mathisen, 400+B #shley @ Hayso!, 400+5. Conser&ation and sustainable practices can result in substantial cost reductions for co!panies 2Doherty, 400;5. In the area of social e:uity, ho8e&er, &ery fe8 co!panies are oin beyond hu!an resource issues into the proble!s of hun er, disease, po&erty, and inGustice that e)clude !any fro! ta9in part in the lobal econo!y 2Maa9, 400;5. %nli!ited ro8th in a finite syste! is not only i!possible, but is the root of !ost en&iron!ental proble!s 2Callio, 400;5. <hile !any citi$ens 9no8 this intuiti&ely, the capitalist econo!ic syste! is founded in the idea of continuous ro8th, and the do !as of econo!ics are rarely :uestioned in the %nited States today 2Callio, 400;5. <here European sustainability concerns are focused on social and en&iron!ental i!pacts of products and ser&ices, %.S. sustainability concerns are focused on lon 1ter! profitability. %.S. fir!s are also less ea er to co!ply 8ith internationally reco ni$ed hu!an ri hts and en&iron!ental standards 2Hart!an, Rubin, @ Dhanda, 400;5. En&iron!ent

10 European o&ern!ents and businesses ha&e !o&ed far beyond the %. S. in CRS initiati&es. In a study by the International Hotels En&iron!ent Initiati&e, it 8as found that 30H of (ritish, ;0H of #ustralians, and only ,0H of #!ericans sur&eyed belie&e the touris! industry is bad for the en&iron!ent 2Clar9, 400+5. Ereen practices sa&e !oney, attract ne8 custo!ers, and help to preser&e the natural en&iron!ent 8hich !uch of the touris! industry is dependent upon 2Clar9, 400+B Casi!, 400+5. Mass touris! has historically had little concern for sustainability, althou h this has chan ed so!e in recent years 2Casi!, 400+5. (ut alternati&e eco1tourists ha&e been accused of =lo&in nature to death and disruptin the li&es of local people> 2Casi!, 400+5. .or touris! to be sustainable, that is to !eet the needs of tourists and locals 8hile protectin and enhancin future opportunities, e&eryone in&ol&ed 2hospitality co!panies, tour operators, tra&el a encies, transportation co!panies, touris! businesses, o&ern!ental a encies, tourists, society, "E's, etc.5 !ust 8or9 to ether to address all of the social and en&iron!ental issues that ne ati&ely i!pact the destinations and the industry as a 8hole 2Casi!, 400+5. Social I!pacts Eco1touris! focuses on the en&iron!ent 8hile sociotouris! focuses on the local culture. (oth alternati&e for!s of touris! see9 to reduce ne ati&e effects of !ass touris! by bein less intrusi&e and respectin the local people, culture, and en&iron!ent 2Minnaert, Maitland, @ Miller, 400+5. #nother interpretation of social touris! has !ore to do 8ith the idea that e&eryone has the ri ht to ta9e &acations, re ardless of inco!e or social status 2Minnaert, Maitland, @ Miller, 400+5.

11 Pro1poor touris! approaches encoura e tourist or ani$ations to inte rate business practices that create ro8th opportunities for locals to participate in the benefits brou ht by touris! 2#shley @ Hayso!, 400+5. Donations to host co!!unities !ay be appreciated but are short1ter! and are si nificantly less beneficial o&er the lon run 8hen co!pared to the financial and social ad&anta es of in&estin in local 8or9ers and local businesses to support the operation 2#shley @ Hayso!, 400+5. Sun City, a resort in South #frica, has a full1ti!e corporate social in&est!ent !ana er 8ho de&elops and i!ple!ents sustainable pro ra!s to teach s9ills and pro!ote industries that supply Sun City and support the host co!!unity such as hydroponic far!in , recyclin , card and lass !a9in plants, alon 8ith education, health and 8elfare pro ra!s, and support of the arts and cultural acti&ities 2Merchant, 400*5. MarriottFs =Path8ays to Independence> pro ra! puts 8elfare recipients throu h ri orous trainin to enable the! to !o&e into e!ploy!ent positions 8ith Marriott 2(rands that do Eood, 400,5. Charity is ood, but inte rated pro1poor acti&ities such as these enable people to help the!sel&es out of po&erty 8hile at the sa!e ti!e benefittin the benefactor. Social proble!s caused by touris!, such as loss of traditional econo!ies and culture, co!!erciali$ation of arts and crafts, displace!ent of local people, and increased cri!e can !a9e destinations less appealin to tourists 2Casi!, 400+5. .or touris! to be sustainable, ne ati&e social i!pacts cannot be i nored. Conclusion 7raditionally business has been pri!arily concerned 8ith !a)i!i$in profits. 7his short1ter! approach, ho8e&er, has lost consu!er support, and business leaders are

14 called to consider the lon 1ter! health of their or ani$ations. 7he ne ati&e en&iron!ental and social i!pacts of the hospitality and touris! industries !ust be !iti ated if the industries are to be sustained and profitable in the future. # =the! a ainst us> business culture !ust be replaced 8ith balanced relationships 8ith all sta9eholders, includin future sta9eholders and those 8ho ha&e been e)cluded in the past, so that social capital can e!er e 2Maa9, 400;5. Corporate Social Responsibility is no8 seen as an =obli ation> of business 2Choi @ Parsa, 400+5. Short1ter! profits at the e)pense of the en&iron!ent and society are short si hted. .or business to be sustainable, the triple botto! line, 8hich !easures econo!ic, en&iron!ental, and social profits and losses, !ust be e!braced by all of business. Social and en&iron!ental proble!s created by business can be sol&ed by business, but it re:uires a co!!it!ent by business and all sta9eholders to consider the social and en&iron!ental conse:uences of unsustainable acti&ity alon side their econo!ic i!perati&e. 7he underlyin the!e in all of the articles reported on in this paper is not that Corporate Social Responsibility is ood and necessary, but rather, ho8 it should best be i!ple!ented. 7here 8as o&erall a ree!ent that 8hile charity is ood, it is best to choose CSR acti&ities that are related to the strate ies and oals and obGecti&es of the indi&idual or ani$ations and that the CSR acti&ities be ood for the co!pany and all of the sta9eholders. Corporate Social Responsibility acti&ities should not be pasted on but are, instead, inte ral to the lon 1ter! success of the co!pany. (usiness and society are dependent upon each other and both !ust be healthy or neither 8ill thri&e into the future. References

1, #ct responsiblyK Corporate ood deeds help co!!unities and build lon 1ter! business. 2400D5. Nations Restaurant News, ,-2,+5, 44.