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HOSPITALITY INDUSTRY 5 min read

Best Circular
Economy practices in
hotels: the producer
and consumer
perspective

WRITTEN BY
EHL Faculty

What is Circular Economy?

One definition of economics is to understand how the economic agents make their decisions to satisfy
their unlimited needs under the constraint of limited resources. Even though it has been clear for many
decades that resources are scarce and that some will be completely depleted in the coming years,
concrete solutions to reduce or optimize consumption and production are still underexplored. For
instance, even though the concept of circular economy (CE) has been around for 50 years (Ellen
McArthur Foundation), it has become popular only recently.

Our preliminary research on the topic of circular economy practices in the hotel industry has
highlighted a key particularity of today’s consumers. Not only are they increasingly demanding in terms
of how much is done when it comes to a hotel's corporate social responsibility, but they are also very
sensitive to how well it is done. Indeed, the current literature seems to suggest that for CE practices to
be impactful from the consumer perspective, they need to be more thoughtful and sophisticated than
few years ago.

Circular economy is defined as a regenerative system in which resource input and waste, emission and
energy leakage are minimized by slowing, closing, and narrowing material and energy loops
(Geissdoerfer et al., 2017). In hospitality or hotels in particular, this can be achieved through reduction of
resource inputs (e.g. raw material, energy, labor, physical equipment) and outputs (e.g. food waste,
emissions), rethink of service or operation processes (e.g. waste management, purchase policies), long-
lasting design (e.g., building, interior design), maintenance, repair, reuse, refurbishing and recycling.

Best practices in circular economy: the producer

perspective
After reviewing the literature to identify all relevant CE practices for hotels, we wanted to select the most
relevant ones for the hospitality industry. Therefore, we designed a questionnaire in which we asked
hotel managers and industry experts to rate, on seven-point bipolar scales, each of the 25 CE practices
we have identified, along 5 different criteria: feasibility, cost of implementation, operating cost reduction,
impact on customer perception and impact on revenue per client.
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The main finding of our questionnaire reveals a trade-off between the cost of implementation of the CE
practices and their impact on guest perception. Indeed, the practices that Become
requirea master of the World
low investment, of Hospitality, Business &
seem
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to have little positive impact on guest perception (e.g., reduce frequency of room cleaning, offer less
room complimentary accessories like shoe polish, comb, toiletries). On the other hand, practices that
could have an important positive impact on guest perception are the ones that are costly to Yes, sign me up!
implement
(e.g., cook mainly with own produced food, use of own produced renewable energy for SPA like solar
panels).
This finding is not surprising but points out to the difficulty of implementing effective circular economy
practices with a small budget. It also seems that the most impactful CE practices that hotels could
implement fall under the responsibility of hotel owners and not hotel managers as they require
significant investment in the hotel infrastructure (e.g., solar panel installation, recycling grey water).

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Best practices in circular economy: the consumer

perspective
To better understand guest perception of hotel circular economy practices, we asked 80 hotel guests to
rate the same 25 CE practices as in the previous questionnaire. Seven-point bipolar scales were again
used and respondents had to rate each CE practice based on three criteria: their willingness to pay
more, the importance of practicing them, and their intention to reserve a stay. It is worth noting that
hotel guests were very favorable about the implementation of CE practices in hotels as they all received
positive evaluations. This supports our hypothesis regarding the importance of circular economy
consideration in today’s consumption behavior.

Results show that the practice for which hotel guests are willing to pay the most is “Guest can choose
remotely the room temperature (via smartphone), heat and air conditioning are generated by own
produced renewable energy (e.g. solar panels, natural resources, geothermic or lake)” followed by “Offer
non-polluting travel options while at the hotel (e.g. e-bikes, e-cars)” and “Recycle grey water (e.g. for
toilets, irrigation) and use own produced renewable energy (e.g. solar panels)”.

Similarly, the most important practice for the respondents is “Guest can choose remotely the room
temperature (via smartphone), heat and air conditioning are generated by own produced renewable
energy (e.g. solar panels, natural resources, geothermic or lake)”, followed by “Cook mainly with own
produced food” and “Use energy efficient electronic/electrical appliances (e.g. LED, A+++)”.

Concerning the intention to reserve a stay, the most promising CE practice seems to be “Use of own
produced renewable energy for SPA (e.g. solar panels)”, followed by “Guest can choose remotely the
room temperature (via smartphone), heat and air conditioning are generated by own produced
renewable energy (e.g. solar panels, natural resources, geothermic or lake)”, and “Offer non-polluting
travel options while at the hotel (e.g. e-bikes, e-cars)”.

As can be observed, there's a practice that systematically ranks in the top 3: “Guests can choose
remotely the room temperature (via smartphone), heat and air conditioning are generated by own
produced renewable energy (e.g. solar panels, natural resources, geothermic or lake”. However, this
same practice seems to be of little interest to the producers. Thus, a trade-off exists for this CE practice
and actually for all others too. Being aware of this trade-off is of course crucial.

The consumer vs. producer trade-off

Based on our results and after normalization of our data, we can classify the different CE practices in 4
quadrants according to the perspectives of hotel managers and experts, named “Return on investment”
and the perspective of hotel guests, named “Added value for guests” (see Figure 1). The CE practices
related to each letter in Figure 1 can be found at the end of this article.

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The detailed interpretation of the 4 quadrants of Figure 1 is trivial. Some practices lead to an above
average return on investments and are very well perceived by the guests. Both economic agents win.
The practices that also lead to an above average return on investments but that bring comparatively less
added value for guests can be seen as easy fixes for hoteliers to perform. When practices exhibit a low
return on investments but are of high added value for guests, they can be considered as long-term
investments, probably still worth being implemented. Finally, CE practices of relatively moderate added
value for guests and leading to a low return on investments may be considered as false good idea
practices to be implemented. The practice “Bed linen and towels are cleaned with natural home-
made cleaning products” falls into this category.

There is one main finding, supporting our hypotheses, that deserves to be brought to the fore. When
comparing the answers of hotel managers and experts with those of hotel guests, it seems that hotel
managers tend to value practices that are related to the reduction of energy use and resources such as
the reduction of food waste or energy consumption, while hotel guests seem to prefer practices that
involve a redesign or rethink of the way hotels are using and producing energy and resources, such as
the use of own produced renewable energy. This observation deserves more attention from the
researchers as it may be the key element for any practice to be truly considered as circular economy.

References:
Geissdoerfer, M., Savaget, P., Bocken, N. & Hultink, E. (2017). The Circular Economy – A new
sustainability paradigm? Journal of Cleaner Production, 143, 757–768.

A Switch on air conditioning or heating system only when clients enter the room

Guest can choose remotely the room temperature (via smartphone), heat and air conditioning
B are generated by own produced renewable energy (e.g. solar panels, natural resources,
geothermic or lake)

C Offer less room complimentary accessories (e.g. shoe polish, comb, toiletries)

D All room accessories are made of natural ingredients and toiletries are dispensed in bulk

E Reduce frequency of bedlinen and towels cleaning

F Bedlinen and towels are cleaned with natural home-made cleaning products

G Reduce frequency of room cleaning

H Cleaning staff follow a training to reduce the use of energy and resources to clean a room

I Recycle food waste (compost)

J Use food leftovers to produce biogas

K Reduce food waste (e.g. produce on demand, share excess food)Get our insights in your inbox!

L Cook mainly with own produced food Become a master of the World of Hospitality, Business &
Education by staying up to date with our latest news.
Implement energy efficient practices in SPA (e.g. no overheating of pool or jacuzzi, reduction of
M
working hours, etc.)

N Use of own produced renewable energy for SPA (e.g. solar panels)
 O Store rainwater (e.g. for irrigation, toilets, washing machine)

P Reduce water consumption (e.g. water flow control)

Q Recycle grey water from guests' rooms (e.g. for toilets, irrigation)
R Use energy efficient electronic/electrical appliances (e.g. LED, A+++)
S Transform or build a carbon neutral building
T Implement tools to monitor and display guests’ water and energy consumption
Recycle grey water (e.g. for toilets, irrigation) and use own produced renewable energy (e.g.
U
solar panels)
V Reduce the number of furniture in the hotel (e.g. in lobby, restaurant, rooms)
W Use of re-manufactured or secondhand furniture in the hotel (e.g. in lobby, restaurant, rooms)
X Encourage hotel guests to travel by public transports (e.g. offer public transport day pass)
Y Offer non-polluting travel options while at the hotel (e.g. e-bikes, e-cars)

TAGS : HOSPITALITY INDUSTRY SUSTAINABILITY RESEARCH

WRITTEN BY
EHL Faculty

WRITTEN BY
Dr Luciano Lopez

Assistant Professor - Dean of EHL Campus (Singapore)

WRITTEN BY
Dr Florent Girardin

Assistant Professor at EHL

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