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The Rise of the Social Enterprise in the Hospitality Industry

Eric Lombardi

The rise worldwide of the Social Enterprise sector is making it easier to achieve the goals of running a solid profitable business, such as a hotel, while also practicing “green” procedures and being a good community partner. This article will describe some of the different approaches that players in the hospitality industry are taking today, and will offer recommendations for how a business may want to take steps to participate in the Social Enterprise Movement in the future.

First, it’s important to understand what a “social enterprise” (SE) is. Social enterprises are a mix between a private business that exists to make money and a nonprofit charity that exists to fulfill a social or environmental mission. A social enterprise is always created to fulfill a mission first, but it is then expected to make money to accomplish that mission. SE’s can be either for-profit or nonprofit.

The SE approach is a legal business platform that is currently being defined differently around the world, with the leading examples being the Community Interest Company (CIC) in the United Kingdom and the Low-Profit Limited Liability Company (L3C) in the U.S.A. Recently the Canadian government decided that any company that gives over 50 percent of their profits to a “social or environmental mission” can legally call themselves a social enterprise.

Examples of Growth of Social Enterprises

The growth of SE’s around the world in the last five years is remarkable. Here are a few of the highlights:

The reason why the social enterprise sector is growing is because it addresses a long list of problems that every community is struggling with, including creating employment opportunities, improving the health and welfare of the elderly, addressing social exclusion, protecting the environment, supporting local agriculture, empowering women, promoting education and literacy, addressing financial exclusion, supporting vulnerable children and providing affordable housing.

The Interface with the Hospitality Industry

The development of SE in the hospitality industry is inspiring a variety of approaches. This fluidity offers opportunities for creativity and “out of the box” thinking and modeling. Examples run the gamut from a hotel franchise that was created as a social enterprise with the goal of creating employment for people with mental health issues, to an adventure travel company that is seeking to help start 50 social enterprises around the world that will provide services to their international guests. A short list of some of the more interesting projects include:

  • The “Good Hotel” chain (London) and the “Le Mat Consortium” hotel chain (Italy) where job training and social re-integration is the goal;
  • The “Dine Academy” (New Zealand), the “La Tablee des Chefs” (Canada) and “Kitchens for Good” (U.S.A.) where restaurants are used as platforms for youth job training, homeless services and food waste reduction projects;
  • The “Zero Waste Kovalam” project (India) where a partnership with local beach hotels has resulted in beach cleanup, job training for the hotels, a cooking school, the use of hotel food waste to power a biogas plant and a crafts reuse/re-manufacturing business using hotel discards (such as old furniture and drapery).
  • The “Conscious Consumers” (New Zealand) social enterprise that helps hotels and restaurants easily procure products and services locally that are environmentally friendly and socially inclusive.

Jennifer Silberman, past V.P. for Corporate Responsibility at Hilton Worldwide, says that youth development projects in particular help to ensure that hotels have the employees they need to service an increasingly interconnected world of travel. More general “community development” projects build a base for tourism to grow because tourists travel to places that are secure and vibrant. She describes four reasons why the “hospitality industry and youth development” is a natural and beneficial fit:

1.     Hospitality, travel and tourism offer high-quality, entry-level jobs to youth in developing countries. By 2022, travel and tourism will employ 328 million people, creating 73 million new jobs. That might be a front desk job in South Africa, a food and beverage manager in Laos, or an entry-level position in myriad cities across the globe where a young person has the opportunity to get a job, earn an income, and gain and build experience.

2.     Youth who see a career path build their communities. Young people who are connected to jobs where a career path and training opportunities are available tend to stay more consistently employed. Companies that incorporate youth development into their business models through investments in pre-employment training and on-the-job professional development help attract and retain young people to the industry.

3.     Companies that invest in youth and sustainability meet their business needs today and for the future. The commitment at Hilton Worldwide is to work to strengthen communities by supporting local suppliers and human rights, to celebrate the cultures and diversity that thrive around us, and to live sustainably to have a positive influence on tomorrow.

4.     The hospitality industry is more than just a funding partner. Organizations should consider how to leverage our human and intellectual capital, create linkages to our networks of owners, distributors, supplies, and partners, convene new partners and use our global marketing and communication channels to strengthen and amplify social messages.

This last point, about “creating linkages”, is perhaps the most important idea and portal into the social enterprise world. Every business in the hospitality industry has a network of suppliers, distributors and partners that provide the goods and services they need every business day.  Many of those goods and services could be provided by a local social enterprise for the same quality and price as a non-social enterprise vendor, and sometimes even cheaper since profit isn’t their primary motivator.

Create an In-house Business Subsidiary

In the event that there are no local social enterprises offering the goods and services needed, then a hotel, or restaurant, or travel company could think about creating an in-house business subsidiary that operates as a social enterprise. Legally, this is a straightforward proposition, and operationally it is still a business venture, but one that has a different orientation toward profit-taking and its uses. The mission is the point, and the profit is merely a means for getting there.

We are in the early days of this new business wave, so it would be useful for anyone interested to attend the annual global conference called the Social Enterprise World Forum (SEWF). This year the SEWF will be in Christchurch, New Zealand on September 27 to 29 (go to http://www.sewf2017.org). If not this year, then the 2018 SEWF will be a special affair in Edinburgh, Scotland, the “Global Leaders” of the social enterprise movement in the world.

Eric Lombardi has been working at the cutting-edge of the Zero Waste and Social Enterprise Movements across the world since the mid-90’s. His working mission has been to transform the “waste management” industry into a resource management industry. Eric was the first national spokesperson for the first Zero Waste organization in the U.S.A. (1997), was a co-founder of the first international Zero Waste Alliance (2002), and was invited to the Clinton White House in 1998 as one of the Top 100 USA Recyclers. From 1989 to 2014, he built the largest zero waste social enterprise in America (www.Ecocycle.org ) and is now a strategic advisor to Eco-Cycle International. (Full professional bio at: https://www.linkedin.com/in/eric-lombardi-72aa5913/)