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January 15, 2005
Sustainable Development Leads to a Stronger Performance
Sustainability is defined as a development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Many seem to think sustainability is a cost factor. In truth, it can be a source of profit. Firms engaging in sustainable development show a better performance, especially in the long run, in all market segments than the respective benchmark indices, according to a study done by Kommunalkredit Dexia, an Austrian Asset Management company.
The World Business Council on Sustainable Development (WBCSD) -- the subject of the study -- is a coalition of international companies united by a shared commitment to sustainable development, guided by economic growth, ecological balance, and social progress. The study (a PDF document) looked at the financial performance of the WBCSD members and analyzed the stock performance compared to corresponding market indices, particularly on a long-term basis. The prior year's study (2003) revealed the same trend. If this trend of improved investor confidence and success holds true for the WBCSD, then it stands to reason that it would hold true for other industries including the hospitality industry.
Actively pursuing sustainable development lets businesses become more competitive, flexible, and durable in a rapidly changing environment. It also increases the businesses' popularity with customers and employees. The study found that sustainable development pays off, even if the philosophy isn't exclusively based on financial gain. Businesses committed to sustainability are led by humans with values and visions. The researchers boldly stated that business leaders who don't share those same ideals, values and visions, as those with an attitude of sustainability, will lose market share in the long term. It's the business leaders with an attitude of sustainability who will thrive and gain market share.
Worldwide the evidence shows that in the long run, sustainable development outperforms the "standard" approach to development. How does that translate to the hospitality industry? The quick answer is that if you develop a hospitality property for today's quick buck, the property won�t have what it takes to flow with the ever-changing economy, tourism patterns, and people's attitudes and passions. That lack of flexibility will hurt the financial performance of the property in the long run. But if more effort is put into creating a property that is gentler on the environment, more self-sufficient in the sense of energy and resource use, and sensitive to the people utilizing the property, then more profit can be enjoyed in the long run, even if there is more up-front investment required.
Those business leaders who keep the long term in their sights will be around when the "long term" becomes "today". Do you want your hospitality business to thrive and be around for the long run? Do you want to be seen as a leader by employees, guests, investors, and peers? If your answer to either of those questions is "yes", then it is time to start looking toward sustainable development and re-development for your hospitality venue. If your answer is "no", then enjoy the ride while it lasts; it will end sooner than you think, and the sales value of your property will be lower when you decide to move on. Sustainable development is an ECOnomically Sound decision.
Posted by Kit Cassingham
