Balancing Service Quality and Sustainability: Circular Economy Challenges in Global Hospitality

The study compares the challenges of adopting circular economy practices in the hospitality industry between the Netherlands and Indonesia, highlighting how service quality concerns in the Netherlands and systemic barriers in Indonesia hinder progress. It calls for tailored, context-specific approaches to overcome these obstacles and promote sustainable practices.

Researchers from the Circular Engine in Bolsward, the University of Groningen, the Massachusetts Institute of Technology, and EDHEC Business School have conducted a comparative study exploring the adoption of circular economy (CE) practices in the hospitality industry across two distinct national contexts: the Netherlands and Indonesia. The circular economy, which seeks to minimize waste and maximize the efficient use of resources, has been increasingly advocated as a crucial strategy for addressing global sustainability challenges. While much of the research on CE has traditionally focused on manufacturing in developed economies, this study shifts the focus to the hospitality sector, which is significant given its substantial environmental footprint and its role in global economic activities.

Service Quality Versus Sustainability in Dutch Hospitality

In the Netherlands, the study finds that one of the most significant barriers to implementing CE practices in the hospitality industry is the prioritization of service quality over sustainability. This focus on maintaining high standards of service often leads to compromises in adopting circular interventions, as businesses fear that such changes might negatively impact the customer experience. For instance, some Dutch hotels have found that implementing eco-friendly practices, such as using low-flow showerheads, can detract from the quality of service that guests expect, leading to a reluctance to fully embrace CE strategies. Additionally, there is a noticeable lack of access to clear and actionable information on how to effectively implement CE practices within the hospitality industry. This knowledge gap contributes to a broader issue of low urgency and motivation to adopt sustainable practices, as many in the industry do not see a clear and immediate benefit from making these changes. Despite the Netherlands’ advanced position in sustainability initiatives overall, the hospitality sector seems to lag, primarily due to the perceived trade-off between maintaining high service quality and implementing more sustainable practices.

Indonesia's Systemic Barriers to Circular Economy Adoption

In contrast, the challenges in Indonesia are more deeply rooted in systemic issues such as weak infrastructure, lack of regulatory enforcement, and insufficient education and awareness around the concept of CE. Unlike in the Netherlands, where the term “circular economy” is well-recognized and understood within the industry, in Indonesia, there is a general unfamiliarity with the concept. Many in the hospitality sector in Indonesia are more accustomed to traditional approaches to waste management and sustainability, which often do not align with the more structured and comprehensive strategies advocated by CE. Furthermore, the Indonesian hospitality industry faces significant logistical challenges, particularly in more remote areas, where the infrastructure to support CE practices, such as efficient waste management and recycling systems, is often lacking. This infrastructure deficit is compounded by a lack of enforcement of existing regulations that could otherwise drive the adoption of more sustainable practices. The research highlights that in Indonesia, the emphasis is often on short-term economic survival rather than long-term sustainability, with many businesses focusing on cost-cutting and immediate financial viability over implementing practices that could have broader environmental benefits.

The Role of Education and Mindset in Driving Change

The study also notes the importance of education and mindset in both countries. In the Netherlands, while there is a higher general awareness of sustainability, this does not always translate into action within the hospitality sector. The study suggests that a more focused effort is needed to bridge the gap between awareness and implementation, particularly in translating the principles of CE into practical and actionable strategies that align with the high service standards that Dutch businesses are known for. In Indonesia, the lack of education about the environmental impacts of unsustainable practices and the benefits of CE is a significant barrier. Many in the industry still rely on outdated methods of waste management, and there is a critical need for educational initiatives that can shift mindsets towards a more sustainable approach.

Context-Specific Approaches for Effective CE Implementation

Overall, the research underscores that while the circular economy offers substantial potential for improving sustainability in the hospitality industry, the path to its adoption is fraught with challenges that vary significantly between developed and emerging economies. In the Netherlands, the challenge lies in balancing sustainability with service quality, while in Indonesia, the barriers are more structural and educational. The study calls for more tailored approaches that take into account these different contexts, suggesting that a one-size-fits-all strategy for CE adoption is unlikely to succeed. Instead, efforts to promote CE in the hospitality sector need to be context-specific, addressing the unique barriers in each setting and fostering local initiatives that can drive meaningful change.

The Need for Stronger Policies and International Cooperation

The findings also highlight the need for stronger policy frameworks and international cooperation to support the transition to a circular economy, particularly in emerging economies where the challenges are more pronounced. Tailored policy interventions that address the specific needs and barriers in different contexts are essential for enabling the hospitality sector to adopt CE practices effectively. Additionally, international collaboration can help share knowledge and resources, ensuring that best practices are disseminated across borders, supporting both developed and emerging economies in their sustainability efforts.