The financial impact of environmental management on operations in selected hotels in Cape Town South Africa

Abstract

Environmental management is a new phenomenon, one which affects not only the way that individuals live their lives today but also how businesses operate. Environmental policies cannot simply be introduced, especially in the hospitality industry. Although the industry thrives off customer satisfaction, like any other business it relies on making a profit each financial year for it to stay operational. This research was undertaken to determine if implementing an environmental policy has any effect on the financial statements of a select group of hotels within the Cape Metropole. In answering this question, the researcher was able to establish what the relationship between implementing environmental management policies was and the effect it has on the financial side of a specific group of hotels. “Hotels are also being pressured to move towards triple bottom line reporting (3bl), involving the relationship between profit, people, and planet” (Kleindorfer, Singhal & Van Wassenhove, 2005:482). “To encourage an environmentally more responsible behavior in the hotel sector, it was necessary to demonstrate the cost savings of these practices” (Bohdanowicz, 2005:188-205). The research methodology consisted of both quantitative and qualitative approaches. Interviews were conducted with participants from key organizations, and with people who were linked to the hotel industry and environmental management. These included government organizations, SARS, which deals with all tax-related laws in South Africa, Eskom, the country’s energy providing company, as well as with a travel agency which deals with hotel bookings on both a local and international level. A focus group was also undertaken to ensure that the problems being researched were discussed fully by likeminded people, and by those who were directly involved with carrying out these policies in hotels. Questionnaires were sent to all the four- and five-star hotels within the Cape Metropole to assess the current situation relating to environmental management and their financial profit or loss. The research determined that implementing environmental policies has both a positive and negative effect on financial statements, thus proving that there is a direct link between the two. The findings clearly showed that environmental policies, whilst good for the surroundings and the environment, can be financially draining for a business if not properly planned prior to implementation. With correct research, however, this can be done in the correct manner, with results that are positive for both the environment and for the company’s financial statements.