Hospitality

A New Dawn in Sustainability & Service

Chris Sheppardson

• Publisher: Business Expert Press
• Year: 2021
• ISBN:
  9781953349736
• Topic: Business
• Subtopic: Hospitality, Travel & Tourism Industry
• Index: Business

This book is an introduction to one of the fast-developing core pillars in business, sustainability, as well as how it is closely tied into the concept of service.

Much has changed during the Covid-19 pandemic; we are seeing companies redefine their value propositions with leaders, once again, returning to core basics and beginning to lead through strong pillars.

The new emerging generations are demanding and expecting more. The bar has been raised and the challenge for all leaders is to meet this. There are new leaders emerging with strong visions of the future. As difficult as 2020 has been, we could well be sitting on the brink of a new age in both sustainability and in service. Out of the dark times could come a lot of good but it will require new styles of leadership to what has be seen over the last 20 years.

CHAPTER 1

How Economic Sustainability Lost Its Way

There has been a growing voice for business to have a central focus, in its strategies, on building stronger pillars in both sustainability and service within businesses. This is not just related to environmental sustainability but also in terms of social sustainability, in culture, in business ethics, in economics, in the management of human capital, and in creating once again a connection between the customer and a company. It is a very broad and wide-reaching agenda which will naturally challenge the focus of many businesses in recent years. Many customers today want to know that they are associating themselves with a brand or business which will contribute to the benefits of society.

There are a number of key learnings to emerge from the Covid-19 crisis and maybe the most important is that many have found something of genuine importance in how communities have reconnected and collaborated together. At the heart of it lies the fact that during “lockdowns” and the pandemic, many have had time for more face-to-face interactions which have arguably led to improved behaviors, compassion, friendship, and productivity.

During this period, many have reconnected with values that are important to them. They have connected again with friends, neighbors, local communities, and local environment and they don’t want to lose this connection. Many want to get back to the basics; to see their companies providing a real service level which impacts positively.

Things will not just go simply back to as it was. Companies are going to have to adapt and make sure their own processes are stronger, that they do have a mission and sense of purpose which is more than just generating profit. There is a pushback, from consumers, against automated services, business arrogance toward customers, increased processes combined with a desire to make people feel once again valued and cared for through designed service focused on the guest. People and service are once again being seen to be of real importance.

Out of all this, there is a growing belief that business will refocus and get their basic foundations right once again. This could see the start of a new progressive age, a broader and more enlightened approach to business in a number of areas. It could be the start of a new golden era which does find a stronger balance between business, environment, society, and customers. However, there is still much to be done, a journey to be traveled and to overcome, which can still happen to hinder progress. All in all, business needs to set stronger roots in the ground so it can build effectively.

In terms of sustainability, this voice has been steadily growing for over thirty years. The last decade seems to have been a time when the argument has moved from the periphery to becoming a core piece. The great hotelier, Ken McCulloch, founder of Malmaison and Dakota Hotels, would often comment:

Too many hoteliers see the guest as almost a transaction rather than thinking through the customer experience. Guests want to feel special. They want to be wowed and one does has to look through their eyes to understand the experience. Running a hotel is a special privilege as it provides the opportunity to really do something that makes the guest feel important and for them then to value you.

Many hoteliers talk about their figures but profit is the sum of a lot of small parts coming together to do something special. Building a great hotel is about getting those small parts right.

We could see the start of a new progressive age, a new dawn, with a broader and more enlightened approach to business. We could well be sitting at the start of a new golden era which does, once again, find a stronger balance between business, environment, society, and customers. However, there is still much to be done, a journey to be taken and to overcome, which carries many dangers and much can still happen to hinder progress.

Many will argue that the Covid-19 crisis has been a catalyst for great change and to a degree this is true but the pressure on change was already steadily growing over-the last decade. Change was already in the making. The Covid-19 crisis may help cement the argument but in truth, it is probably just been a period which allowed many to reflect and review what they believed in.

There has been a growing level of discontent with the practices of many businesses, a declining trust in many leaders, a growing frustration over-what many have seen as a “tick-box” approach to CSR and sustainability with no real action. There has also been a growing frustration in the fact that many women have not broken through to board level as well as the lack of BAME in senior positions. All this has created a gradual erosion in the commitment of many younger talents who want to see higher standards in behaviors and a far more progressive approach to business.

It will be interesting to review how historians write about the years 2008 to 2020 and how kind they will be to those in leadership roles. When the financial crash of 2008/09 took place, many noted that it would be a time to learn key lessons, that leaders would need to learn from the errors made. At the time, it was described as a major heart attack to the system which would create the basis of corrections. Behaviors had changed with the long financial boom and unfortunately, values had been eroded. Prime Minister Gordon Brown commented that:

The motto of the old order in the City of London was, “My word is my bond,” but the financial crisis revealed a culture quite alien to that heritage. The stewards of people’s money were revealed to have been speculators with it. (5)

Steve Bannon commented that:

My old firm, Goldman Sachs—traditionally, the best banks are leveraged 8:1. When we had the financial crisis in 2008, the investment banks were leveraged 35:1. Those rules had specifically been changed by a guy named Hank Paulson. He was secretary of Treasury. (6)

As indicated earlier it was the financial sectors which took the brunt of the criticism. Business faced a turbulent period with the “age of austerity” being announced, but were any lessons from the 2008/09 crash learnt? Did the values of those in leadership teams change and adapt in response to the crisis?

Arguably, many behaviors actually declined further. Many directors protected themselves during the fallout and it was the lower- and middle-income level employees who faced the worst. Lost employees were replaced with automated systems; business processes and the gap between the wealth of senior players and those in middle management actually got greater. Research shows that the remuneration of senior players during this time doubled whilst the relative remuneration of middle management only grew by between 25 percent and 30 percent in the same period. The argument was that senior players were being rewarded via greater bonuses on business results and returns to the shareholder: a fair argument even if one dimensional. They were being incentivized to deliver greater profit, but at what cost?

It would naturally lead to increased self-interest and one-dimensional thinking which focused almost solely on results. Even if this was understandable to rebuild from the crash, it was clearly not a long-term, sustainable approach. The increased activity by venture capitalists and M and A activity has attracted blame for this but of course, this is simplistic. Business models focused on shareholder returns to a higher level and the core roots a business needs were not invested in strongly enough. It became an accepted reality from time back to the late 1990 s to reduce spend in key “soft” disciplines in return for higher net margin, regardless of the consequence.

The response has often been one of genuine surprise in recent years over-some of the statistics to emerge over-the disengagement of employees and the erosion in trust in leadership teams. There are many who will still dispute the rise in stress, anxiety, and mental illness. Many others genuinely reject the levels of disengagement as being almost a lack of character or a lack of ambition and drive. However, the growing disengagement is then surely a natural evolution from the aforementioned?

Maybe one of the best ways to illustrate the point is the change which has taken place across the human resources function over-the years. Many are critical of their HR teams but the role has changed from having a genuine focus on the human asset as the role was originally designed to be to becoming an almost legal and technical function. The result has been an erosion in trust, a decline in focus on culture and on the development of talent. Business has moved to becoming increasingly controlled, limiting all risk. It is a natural consequence that limiting risk creates an often stale, uninspiring environment.

It is natural that today there is a genuine call for better leadership, broader vision, and a focus on building a business strategy that embraces environmental, economic, cultural, and social sustainability. The real question which should be posed is: why is it that such gulfs were allowed to develop and grow? Why is it that many resorts and hotels worked so independently of their communities?

One of the reasons is that there has been a preoccupation with business models over-the value of culture and people. It was driven by a change in the base business ethos over-the years. Russell Kett, Chairman of HVS, explained some of the reasoning for the change in leadership priorities:

One of the fundamental changes is that leadership has moved from people who were traditionally hoteliers, who grew up having been to a hotel school, join a hotel company, worked their way up through the company, developed skills along the way, were seen to managers, then leaders and possessed a lot of hands on experience in operating hotels. Those are the leaders of yesterday. Today’s leaders have a much greater focus on understanding the business itself, what drives the business, they may not even have worked within a hotel but they do have the ability to be able to lead a company, and know what to do when it comes to making improvement, when it is necessary to deliver an increased shareholder value and that is why leadership has evolved to where it is today.

The reason for the change? I think the shareholders have increasingly required the leaders of hotel companies to deliver an increased return on investment. In doing so, they have taken the lead in requiring the companies to be better managed, better operated, better led, by people whose experiences are broader than purely being greater hoteliers. The shareholders have dictated the change and the hotel sector has followed.

There has been an evolution of separating the bricks from the brains, traditionally the owner of the hotel would also operate. The management of the hotels have become more separated from the ownership of the actual assets and within the management, you have also got the split between the branding and the operation. The business model has evolved. Franchising has increased. Management companies have increased along with the ownership model having changed. You today have a focus on each component being optimised to be able to deliver a greater return in the investment. That is the driver. How can we make more money? It is a more sophisticated business model and it has been very successful.

As shareholders have asked for more, so it is natural that this demand has ripples and impacts the business models in different ways.

In the early 2000s, a very senior industry figure spoke in a seminar at the Ecole hoteliere de Lausanne, one of the world’s leading hotel schools, and noted that for many of the FTSE 500 CEOs, the average lifespan was less than 5 years and therefore, they had little time to focus on people and culture. All that mattered, it was argued, was shareholder return and trying to maintain tenure. This always seemed to be a negative philosophy which was bound to create long-term problems. It was also a failure to fulfill the duties of a CEO as, like it or not, people and culture are part of the job. A leader has the power to select their priorities but it does have ramifications.

There is no doubt that the role of CEO has become increasingly harder as everyone has also had to learn new skills to go alongside the increased expectancies of recent times. We live in an era where the pace of change has been accelerating. Companies have been working to tighter margins, have been having to fight to retain relevance either among their target audiences, against their traditional competitors, or against new market entrants who are reshaping market dynamics. Given all this, it is no surprise that the average lifespan of an FTSE-listed company is decreasing.

Of the 100 companies in the FTSE 100 in 1984, only 24 were still breathing in 2012. The survival factor for today’s companies relies on having an established leadership that can combine a working knowledge of the company or industry with the commercial acumen needed to operate in a globalized market experiencing a fast pace of change.

A Move Toward Localism

It is a strange irony that so much has been written about globalization and brands over-the last decade and yet, when Covid-19 has come calling, many have found greater joy and pleasure in localism and rediscovering communities, and of course, hospitality can play a key role as it sits in the heart of every community.

As more and more people look toward seeking something which is genuine and authentic, so they are turning to their local communities, its history, and its produce and culture. For some, the importance lies in their vineyards, their food, wine, and produce.

Hotels, resorts, restaurants, and bars can play a far more proactive role in telling the story of their community’s history and cultural legacy. As guests seek ever greater experiences, it is a natural link for hospitality to be an ambassador for the culture of their region. As localism becomes ever more important, so hospitality has a genuine opportunity to show its genuine modern importance in culture and society. Hospitality can bring people together, bring a stable pillar that sits at the center of communities.

In so many ways, it could be an exciting opportunity for those who grasp the opportunity. It is nothing new, simply finding a renewed voice. When one travels across France and Italy, one expects to engage by the great wines and produce of the regions. The French have long argued that their gastronomy has always been the best in the world as each region has stayed true to its own regional recipes, passed down from generation rather than create new fusions and food styles. It is the same in Italy as Italians take great pride in their regional dishes and produce. It is genuine and authentic and one of the pleasures of traveling across Europe.

Localism is becoming ever more important to millennials and the younger generations who are seeking a greater sense of belonging than the drive toward globalization which has dominated the last 20 years. They are finding purpose and mission within the communities in which they live rather than in corporate concerns where they feel disengaged and lacking faith in the core objectives. It is a sad reflection on the last decade.

Everyone talks about the new norm and the forecasts are that the new norm will not be about globalizat...

Table of contents

• Cover
• Half-Title Page
• Title Page
• Copyright
• Dedication
• Description
• Contents
• Prologue
• Introduction
• Chapter 1 How Economic Sustainability Lost Its Way
• Chapter 2 Sustainable Business
• Chapter 3 Social Renewal
• Chapter 4 Cultural Sustainability
• Chapter 5 Change to the Work Place
• Chapter 6 Sustainability Through Food
• Chapter 7 The Cousins—Sustainability and Service
• Chapter 8 Nothing Is More Important Than Trust and Relationships
• Chapter 9 An Industry of Hope and Optimism, One Which Can Break Barriers
• Chapter 10 Service Is purpose
• References
• About the Author
• Index
• Backcover