Measure Hotel Performance

How to Measure a Hotel’s Performance from a Triple Bottom Line Perspective?

Introduction

In 1994, John Elkington first coined the phrase “the Triple Bottom Line (TBL)” which consists of three parts: profit (the first “bottom line” of the profit and loss account to measure corporate profit), people (the second “bottom line” of a company’s “people account” to measure how socially responsible an organization has been throughout its operations), and planet (the third "bottom line" of the company’s “planet account" to measure how environmentally responsible it has been), which aims to measure the financial, social and environmental performance of the corporation over a period, meaning that a company that considers its TBL is taking account of

As The Economist (2009) reported that “this idea enjoyed some success in the turn-of-the-century zeitgeist of corporate social responsibility, climate change and fair trade”. It also helps organizations to develop a framework for integrating social, environmental and economic aspects into business operations (Painter-Morland, 2006). In particular, there is a positive relationship between the use of TBL reporting and overall hotel performance (Assaf, Josiassen and Cvelbar, 2012). However, one criticism of TBL is that these three separate accounts cannot be easily aggregated. For example, it is difficult to measure the planet and people accounts in the same term as profits, that is, in terms of cash (The Economist, 2009).

The evolution of measurement of a hotels’ performance

Over the last 30 years, the evolution of organizational performance measures can be summarized in two phases from shareholder theory to sustainability:

First phase (in the 1980s): From Shareholder Value to Stakeholder Theory (Hubbard, 2009).

Porter (1980) stated that “ The firm was viewed as belonging to the shareholders, so shareholder theory, which uses shareholder return to measure overall firm performance, dominated organizational performance measurement

Reflections and Recommendations

The increasing interest in sustainability reflects a growing concern about a range of major challenges for society and the pressures this is putting on natural resource consumption, food supplies, climate change, growing levels of pollution, the loss of natural habitats, and the increasing scarcity of water resources in some areas of the world.

In view of these effects, researchers exploring sustainability in the hospitality industry can profitably link their work to the growing body of work within the social sciences and this may in turn encourage the development of more critical perspectives in exploring the evolving, but complex and contested, role of sustainability within the economy and society (Comfort, Hillier and Jones, 2014).

Looking to the future, Comfort Hillier and Jones (2016) raised some suggestions from a practical perspective for the hospitality industry