Ken Kadhi Thesis

To what extent can business modeling transform
the hotel sector to fit a greener profile?
The development of a sustainable business model through a comparative study
between the Danish and Kenyan hospitality industry.
Copenhagen Business School- 31stth May 2016
Department of Service Management
A Master Thesis by Ken Pierre Kadhi 220583-XXXX
Supervisor: Lise Lyck
Characters: 171, 061 including spaces (75 pages)
A Masters thesis by Ken Pierre Kadhi

Acknowledgements
I would like to thank everyone who helped in the development of this thesis.
Special thanks to Lise Lyck my supervisor, for helping me with the details
regarding the development of this project. I would also like to thank my father
Joe Kadhi, whose extensive knowledge in editing has aided me with writing
techniques for my project. And last but not least, I would like to thank my wife
Pernille Kristine Kadhi for supporting me in so many ways so that I could
complete my thesis in good time.
Ken Pierre Kadhi

Table of contents
1. Introductory section
1.1 Introduction and problem identification 1
1.2 Problem statement and research questions 3
1.3 Structure and reading instructions 4
1.4 Methodological approach 5
1.4.1 Research philosophy 5
1.4.2 Research approach 6
1.4.3 Research Strategy 6
1.4.4 Time Horizon 7
1.4.5 Qualitative data collection and data analysis 7
1.4.6 The model 8
1.5 Delimitations 9
2. Business models and sustainability concepts
2.1 Literature review 11
2.2 Interrelations of the two concepts (Business modeling &
sustainability) and their application within hospitality 17
2.3 Conclusion to sub question one 22
3. Measurement of current sustainable value within a Kenyan, Danish
context
3.1 The business model canvas 24
3.2 Data findings of sustainability within Kenyan and Danish Hotels 32
4. The Business Model
4.1 The Model 46
4.2 Elements of the Model 46
4.3 Model rationale and conclusion to sub question two 61

4.4 The described in Tiers 62
4.5 Feedback from the proposed model 63
5. Analysis through a comparative study
5.1 Comparative study and conclusions to sub question three 66
5.2 Similarities 66
5.3 Differences 71
5.4 Limitations of the model 73
5.5 Conclusion 74
6. Bibliography 91

Abstract
The aim of this thesis is to address sustainability in the hospitality industry.
Based on a comparative study between Kenya and Denmark, this thesis aims to
make sustainable initiatives as core business principles where day-to-day
processes work towards sustainable goals. This is achieved through the
development of a sustainable business model where business model components
have been combined with principles of sustainability. For economic outcomes to
be clarified, there is emphasis on social and environmental aspects and part of
the findings show how these dynamics are inseparable from generating revenue.
The sustainable business model developed illustrates how value is proposed,
created, shared, delivered and finally captured as it aims to conform to
conventional business model rationale. Moreover, the comparative study
between Denmark and Kenya develops a versatile model that is intended to be
applicable within a majority of hospitality establishments.
This comparative study was able to identify how sustainability is developed
within developing countries vs. developed countries illustrating how technology
and innovation is manipulated to address socio-environmental issues.

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1
INTRODUCTORY SECTION
1.1
Introduction and problem identification
Being the world’s largest service industry employing over 243 million people, (8.7% of the
global workforce) the hospitality sector contributes an estimated 5% to the worlds GDP
(Sloan, Legrand , & Chen, 2013, s. 14) with these high statistics, there are corresponding
impacts to the environment and society. Put into an economic perspective, the industry
was in 2008, able to generate US$ 946 billion in the United States alone; signifying
substantial foreign exchange earned by the industry. UNTWO (United Nations World
Tourism Organization, 2005)
With the increase in global economic prosperity amongst the working class, the desire to
travel has proportionally risen. This results in expansion and growth where dozens of new
properties open weekly on a global scale. Consequently, this has a substantial negative
impact on the environment and could cause strained relationships with people in both local
and international realms of the global market. (Sloan, Legrand , & Chen, 2013, s. 14)
With the construction and daily operation of hotel establishments draining non-renewable
resources, the travel and tourism industry has been shown to have the highest negative
influence on the environment. Pollution, waste and green house gas emissions being the
main culprits (Sloan, Legrand , & Chen, 2013, s. 15)
Definitively, the hospitality industry encompasses a diversity of products and services.
Some examples include; luxury hotels, cruise ships, casinos, catering firms and so on. But
for the sake of this thesis, the focus will be on hotels which fall under the general context
of hospitality where the important social & physiological needs (shelter and comfort) are
provided with special focus on processes. In today’s hotels however, the service provision
of these seemingly simple needs has become more complex making it quite a challenging
task.

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With the increase in these complexities, it has become quite imperative for the industry to
take increased responsible initiatives in order to mitigate if not eliminate the
unsustainable practices. Moreover, the development of sustainable operations should
cater to un-compromised levels of comfort with regard to quality experienced by the
users/consumers of the sector and monitor operations internally and externally.
Defining a sustainable hospitality operation according to the United Nations World
Tourism Organization (United Nations World Tourism Organization, 2005): ‘Tourism that
takes full account of its current and future economic, social and environmental impacts,
addressing the needs of visitors, the industry, the environment and host communities.’ This
statement draws inspiration from Elkington’s1 triple bottom line principle (Slaper & Hall ,
2011) where in respect to hotel management, determining the resources used could have
an influence on economic, societal and environmental benefits through a sustainable
hospitality management system in an attempt to securing opportunities for future
generations.
The economic dimension here strives to fulfill profit maximization but in this case,
monetary benefits are initiated with social and environmental benefits in mind. For the
most part, hotels that currently pursue a greener profile generate economic benefits
through sustainable management systems where cost savings are accumulated. This is
achieved with the aid of innovative energy and water efficient technologies that greatly
reduce consumption levels to a fraction of what they used to be. Increases in the market
share and employment opportunities are also created by socio-environmental initiatives
that in turn develop income-generating ventures. This is made possible through improved
relationships with stakeholders and other external actors. (Sloan, Legrand , & Chen, 2013,
s. 14)
From the social aspect, here the industry has the responsibility of ensuring it can provide
opportunities for the communities they operate in. Moreover, it involves participating in
providing solutions for some of the problems typically experienced in a society. Examples
include, education, healthcare, gender equality and maintaining the cultural integrity of
local communities. Typically though, the industry takes an approach that involves
1 John Elkington (1994) Triple bottom line frame-work: Balancing Social,
Environmental & Economic aspects (Slaper & Hall , 2011)

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communities in taking part in sustainable initiatives. Providing suppliers with knowledge
that encourages sustainable practices is of particular importance. To reinforce its
sustainable initiative through sourcing, the industry partners with suppliers2 (Matos &
Silvestre, 2013) to ensure all the food and beverage items purchased has (as much as
possible) organic specifications and has been produced in a manner that both conforms to
sustainable requirements and protects employees & animals (for the case of animal
products).
From the environmental front, the industry focus is on the protection of the environment
first and fore most, and the minimization of waste and emissions. The environment’s state
is constantly under threat as hotel operations are typically not environmentally friendly.
However, there are strategies and policies3 in place that monitor the construction phase
and the operation phase, which require an abundance of energy that produce substantial
amounts of waste. With that, there is significant focus on strategies that minimize waste
through closed loop4 initiatives (Winkler, 2011) and renewable energy innovations like
solar and wind energy producing solutions that virtually have non-existing emissions.
From the business model perspective, sustainable initiatives here are translated to value.
The thesis will attempt to show the valuable monetary and non-monetary outcomes of a
hotel establishment going green. The value here simply devices methods that enhance
efficiency and productivity with the triple bottom line through energy saving measures,
water saving measures, job creating opportunities & waste minimization practices.
Through the process of value reframing, the development of the business model,
recommends a framework for creating and capturing value and at the same time, doubles
as a tool that comprehensively adopts sustainable practices.
1.2
Problem statement and research questions
As sustainability in the hospitality industry is currently being pursued, the manner in
which sustainability is implemented will be investigated. For an establishment to
2 Managing Stake holder relationship and their interests
3 Policies that are goverened by the proposed business model
4 Strategies that focus on reducing, re-using and recycling

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genuinely be fully sustainable then to what extent could business modeling enable the
adoption for such initiatives? Leading to the following problem statement:
To what extent can business modeling transform the hotel sector to fit a greener
profile?
 Sub Question1: How has the interrelations between business model and
sustainability components been utilized in the literature?
 Sub Question 2: How does the proposed business model aid in transforming
the industry’s mindset in engaging in sustainable operations/initiatives?
 Sub Question 3: To what extent is the compatibility of the proposed business
model in a Danish context? Kenyan Context? (Comparative study)
1.3
Structure and reading instructions
The thesis has been structured into seven chapters as highlighted below:
Chapter 1. Introductory Section
Chapter 2. Business models & Sustainability Concepts
Chapter 3. Measurement of current value generated
Chapter 4. The model
Chapter 5. Concluding Section
Chapter 6. List of appendices
Chapter 7. Bibliography
In the first chapter, a brief introduction to the concept of sustainability and business
modeling are presented. The problem statement is included here along with the main
research question and three sub research questions that further investigate the effect of
the combined concepts. As an extension of this chapter, the research methods and
philosophies will also be included expounding on the research paradigm & approach, the
case study, data collection method and the limitations experienced in the making of the
project. Hence the focus is on the introduction and methodology. Chapter two examines
the interrelations of the business model and sustainability concepts form a wide spectrum
of industries, offering insights as to how these concepts can be combined with respect to
the hospitality industry. In essence, chapter two consists of the literature review and
forms a conclusion for sub-question one. Chapter three, using the business model canvas,

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seeks to measure how much value with respect to sustainability initiatives hotels are
currently generating. This section will mostly comprise part of the research findings,
whilst making the first section of the research. Chapter three will also provide the basis
(assumptions) for the main research question that will be fully answered in later
chapters. Chapter four presents a hybrid model constituting multiple business model
designs to form a ‘hybrid’. The concepts used for the hybrid model will stem from the
perceptions of the authors from the literature review in chapter two. However, before the
concepts are used, it will be argued as to why they have been chosen to suit the model.
Moreover, chapter four comprises part of the findings in that the new model developed,
will be tested against a Danish and Kenyan context. Hence this will form a partial
conclusive answer to the main research question as well as doubling as the initial
analytical framework and a conclusion to sub-question two. Chapter 5 here discusses all
the findings made in the entire thesis providing insight as to what has been learned, and
what areas would need further research for the development for sustainability in the
hospitality industry. Subsequently, chapter five will also form the conclusion for sub
questions three forming additional analysis in pursuit of finding solutions to the problems
regarding sustainability. Chapter 6 lists the bibliography.
1.4
Methodological approach
In this section, the paper will discuss the relevant types of procedures that are best suited
for addressing the research questions. By utilizing Saunders research ‘onion’ as guiding
tool/blueprint, I will take a step- by- step approach through the ‘layers’ selecting the
appropriate methods of data collection to answer the research questions. As Michael
Crotty puts it…’Your assumptions about human knowledge and about the nature of the
realities you encounter in your research inevitably shape how you understand your research
questions, the methods you use and how you interpret your findings’-Michael Crotty 1998
(Saunders, Lewis, & Thornhill, 2012, s. 128)
1.4.1
Research Philosophy
Research philosophy here aids in the development of knowledge as it forms the basis of
any research. The choice of philosophies also aids in influencing which choice of research
strategies, data collection methods and processes that will be implemented for answering

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the research questions. Research philosophy is typically divided into three categories
namely Ontology, Epistemology that aid in the perception of knowledge. (Saunders, Lewis,
& Thornhill, 2012, s. 129). With the relative difference of each research objective, the
primary philosophy selected will be pragmatism, for the simple reason that it allows me
as the researcher to work with different philosophical positions to avoid limiting the
potential research outcomes. Considering that the thesis will aim to propose
recommendations in approaching the pursuit of a greener profile, the philosophies and
paradigms chosen make the initial research a process of observation of reality and social
interactions to attempt in selling the mindset of fundamental change5. Moreover, because
this is an explorative paper, the pragmatic approach will encourage the use different
perspectives within the research process.
1.4.2
Research Approach
The research approach chosen for my paper will be abduction. For the development of the
business model, I feel abduction is best suited for the project as it combines both
deduction and induction (Saunders, Lewis, & Thornhill, 2012, s. 147) Using the combined
approach will hopefully aid in accumulating a wealth of data with regard to the
development of a green business model that will then be further tested to analyze its
performance, whilst not being restricted to a particular dominant research approach.
Conclusively, the data collected will be used to refine the proposed green business model
using a qualitative research design that will enable an in-depth understanding of the
current hospitality scenario and quite possibly, identify the gaps of current sustainability
strategies within the context of the triple bottom line.
1.4.3
Research Strategy; Multiple case studies
Considering the nature of the research design is exploratory, a fitting strategy would be
multiple case studies as this explores the sustainability and business model phenomenon
within the framework of hospitality. The case study strategy has considerable ability to
generate answers to ‘What’, ‘How’ and ‘Why’ questions (Saunders, Lewis, & Thornhill,
5 The proposed business model presented in chapter four

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2012, s. 179). However, Robert Yin (Yin, 2009) illustrates the importance of defining the
limitations with regard to time utilized on the cases, the groups/organizations chosen,
geographical area, the type of evidence collected and the priorities for data analysis (Yin,
2009, s. 28). This presents itself as a potential disadvantage as the data collected may be
controlled by these variables having a substantial influence on the findings. The case
study strategy will also be relevant in this project when making the comparative study of
the performance of the proposed business model between Kenyan and Danish hospitality
establishments.
1.4.4
Time Horizon
Though there is limited time to compose the thesis, I as the researcher would like to
incorporate both longitudinal and cross-sectional studies. For the development of a green
business model, I will need to carry out a cross sectional study to purely observe and
measure the current value generated by hotels (across Kenya & Denmark) within the
context of sustainability and business modeling. As Saunders, Lewis & Thornhill state,
‘Even with time constraints it is possible to introduce a longitudinal element in your
research’ (Saunders, Lewis, & Thornhill, 2012, s. 191) Based on the completion of the
model, it is where elements of longitudinal studies shall take effect as I study the ‘change6’
of how adaptable and versatile the proposed model is.
1.4.5
Qualitative Data collection & Data analysis
The data collected in this thesis will be both from secondary and primary sources. The
secondary data will stem from the literature of collected articles relevant to sustainability
and business modeling. All of which are peer reviewed academic articles that specifically
aim to illustrate the increased value generated from sustainable initiatives through
innovative business modeling. Moreover, the articles show the gaps and complexities
firms face when undergoing such ‘radical’ change. Though most of the articles collected
have nothing to do with hospitality, it is the concept of sustainable business modeling that
will be of specific interest and the ‘walk-through’ of how firms have changed or are in the
6 The feedback from the proposed model

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process of change that will be utilized in relation to the composition of this project. These
articles will be thoroughly investigated in chapter 2 (Literature review) of the thesis.
As for primary data collection, in-depth interviews will be utilized to acquire the relevant
information. These in-depth interviews will aid me as the researcher to be fully engaged
with my interviewees to fully understand the systems put into operation where
qualitative data will be gathered. When collecting data from the Kenyan perspective, I will
use Internet mediated interviews7 so as to maintain contact giving my interviewees from
Kenya the chance to reflect and avoiding compromising the quality of data. And from
Denmark I will use face-to-face interviews to achieve the same outcome regarding data
collection. The interviews will be based on the same context so as to demonstrate the
differences between the two countries, which will form a very vital part of the designing
of the hybrid model.
1.4.6
The model
The model that will be designed later in chapter 4, will utilize concepts from various
authors. Those concepts will then be slightly re-adjusted to better suit the adaptability of
the model within the hospitality industry. To give a rough idea of how the model aims to
instill sustainability within startups and existing hotels, is a simple rationale; Keeping the
integrity of the business (Hotel/ Destination) protected and prolonged by addressing Social,
Economic and Environmental needs through a mindset change (sustainability education)
redesigning new products and services (Business model dynamics) that conform to
sustainability and hence assuring durability –Own quote.
The model is developed within 3 tiers. The first focusing on educating and raising the
awareness levels on sustainability within an internal setting; that is within the company.
This is achieved by engaging all departments within the designated hotel and developing
indicators in relation to social, environmental and economic needs that better conform to
sustainable practices. These indicators also double as the value proposition developed
by the hotel. Focus here is on indicators that develop and improve social, environmental
and economic conditions directly related to the hotel.
7 Whatsapp is a mobile phone application typically used for international calls

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The second tier focuses on educating and raising awareness externally where players in
the value chain are included. By prioritizing stakeholder interests, sustainability here is
integrated into the external value chain through sustainable business archetypes that
actively involves the various stakeholders within the industry. Their involvement is
encouraged through a collaborative network that creates a scenario where mutual
benefits can be enjoyed and consists the value creation stage. The value creation here is
two fold, within a business-to-business scenario; where missed and destroyed value
within the value chain is accounted for and re-introduced as ‘opportunity for new value
creation’ – A value-mapping tool developed (Short, Rana, Evans, & Bocken , 2013)
essentially ‘recycling’ value within the model. From the business to consumer scenario,
the holistic combined efforts of tier one and two comprise the value delivery to the end
consumer. The products and services enjoyed by hotel guests will have a deep-rooted
attachment with sustainability dynamics (environmental, economical and social) that
shows transparency or a story line of how the products and services were developed
adding to the authenticity of a sustainable profile improving brand image.
The third tier is inspired by Chesbrough and Rosenbloom’s business model (Chesbrough &
Rosenbloom, 2002) where it demonstrates how mediating between technological and
economic domains for value creation within a business. Because tier one and two have
covered value propositions and defined the structure of the value chain, the remaining
components will cover: Market segment, Revenue generation mechanisms, estimated cost
structure and competitive strategy that comprise the value capture. Elements of the
technological and economic domains that define the innovative role of the model are
present in tier one and two and the model will show how they are presented in those
respective tiers.
1.5
Delimitations
For the preposition as something as serious as a business model for a whole sector, I think
time would be a factor as the amount of research and tests required will exceed a period
of 6 months. I do not expect this business model preposition to be the answer of what ails
the industry, but I do hope that it comprises a part of the solution. As the focus will be
mainly on the environment and social outcomes taken from the TBL concept (Slaper &

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Hall , 2011) the economic pillar (Porter & Kramer , 2006) will only be utilized if it is
beneficial for both the social and environmental devices. As a result this may alter the
revenue model to some degree if not at all. (Given that the main problems circle around
social and environmental issues) With reference to the availability of information from
hotels, it is uncertain how much will be revealed as performance of some of these internal
components remain confidential for some of them. This information could prove useful in
mapping out the specific company’s market position, for the intent of measuring the value
it generates in relation to establishing an initial design for the sustainable business model.
As this thesis attempts to sell a mindset change to the industry, it is also uncertain the
custodians of the sector will buy into it. As the business model will attempt to
distinctively re-frame the various potential forms of value to be captured, it will be very
interesting observing to what extent they could be convinced, as value in the model may
not always be related to remuneration. On the other hand, a majority of the value created
implies huge cost savings through shared value creation (Porter & Kramer , 2006) from
environmental & social initiatives. Another limitation I faced was the fact that the
literature available about the concepts of sustainability and business modeling was
limited moreover, even more unattainable in reference to the hospitality industry. The
literature that was available on sustainable business modeling, spun from an array of
industries. It was a bit of challenge to put some of these innovative concepts in relation to
hospitality, as these industries differed greatly when compared to hotels.

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2
Business Models & Sustainability Concepts
2.1
Literature review of Business Models & Sustainability Concepts
Though the presentation of this literature review is unconventional, I have chosen to
present in this form to demonstrate how the concepts used here will be later incorporated
in the design of the proposed model. Because sustainability within hospitality is relatively
new, the concepts from the articles used for the model design are not all specifically for the
application to hotel operations which is ultimately clarified through the first sub question:
How have the interrelations between business model and sustainability components
been utilized in the literature?
I find it necessary to first define the concept of a business model according to the following
authors.
 David Teece: ‘How enterprises create and deliver value to customers, and then
converts payments received to profits’ (Teece, 2009)
 Osterwalder, Pignuer & Tucci: ‘A business model describes the rationale of
how an organization creates, delivers, and captures value’ (Osterwalder &
Pigneur, 2009, s. 14)
 Amit & Zott: ‘ We conceptualize a firm’s business model as a system of
interdependent activities that transcends the focal firm and spans its boundaries.
The activity system enables the firm, in concert with its partners, to create value
and also to appropriate a share of that value’ (Zott & Amit, 2010)
Based on these three perspectives, my understanding of the concept of business modeling
is centered on value. How it is developed & created is a very important element, as this will
define how much monetary value a pre-determined business model design will be able to
generate.
The literature investigated with reference to sustainability & business modeling consisted
of about 25 peer reviewed academic articles. For the most part, the articles illustrate how
innovative business models can be developed with sustainability in mind. However, out of
the 25 articles, only 4 were written specifically for the hospitality industry.

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Consequently, embarking on the first research objective of investigating the relationship
between business modeling and sustainability, I will overlook the fact that a majority of the
articles are not about hospitality. Instead, the focus will be purely on the concept of
sustainable business modeling and how firms have been able to adopt sustainable practices
within their daily operations.
The selected following articles will not only serve as an answer to the first research
objective, but as design inspiration for the proposed business model that will be used to
answer the third research objective. The articles will be categorized within themes
intended for the application to the hospitality industry, as most of the articles do not apply
to hotels. Included with the articles will be the authors and the year of publication. The
articles themselves have been summarized and then put into perspective on how the
concepts could be applied to generating a sustainable business model for hotels. Not all the
articles will be used only the ones that I felt possessed the most relevance with the
proposed model design.
Article 1: (Mihalic, Zabkar, & Cvelbar, 2012)
A hotel Sustainability Business Model: Evidence from Slovenia
The article is about a case study of a hotel’s effort to become more sustainable. Also based
on the TBL8 (Slaper & Hall , 2011), this business model tries to solve the problems related
to the social, economic and environmental realms whilst still making a profit. Based on
sustainable tourism, and CSR9 elements of the UNWTO (United Nations World Tourism
Organization, 2005) sustainability model combined with the TBL reporting model are
utilized to create a hotel sustainable business model (Mihalic, Zabkar, & Cvelbar, 2012). The
HSBM was a tool created to measure the awareness of, and reporting against various
sustainability indicators outlined by the TBL. The HSBM introduces three innovations to
the existing model, Tourist Satisfaction linked to the economic pillar, and concurrently a
performance indicator. Environmental pillar is extended to entail Environmental education.
The Social Pillar is broken down into three sub categories, human capital (employees)
cultural capital (local culture) and power to change/participation (relationships with local
inhabitants, organizations and communities to come to agreement toward sustainable
development). After the model was abstracted, three independent research groups
8 Triple bottom line; Social, Environmental and Economic
9 Corporate Social Responsibility

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representing the Social, Environmental and Economic worked on the various indicators
that would drive the model. A total of 79 indicators were proposed. To develop a final list of
indicators, the study carried out a pilot test on various hotels. The results showed that
many of the proposed indicators were not recognized or not monitored. As a result, the
panel trimmed the HSBM collection of indicators where a consensus of 36 indicators was
met. The results from using the indicators revealed that economic performance still
remained significantly more important than the environmental and social pillars.
Motivated by direct cost savings, hotels focused on green performance like energy & water
consumption, waste management showing that indeed, they did utilize the environmental
resource indicators. To be able to develop a business model geared towards sustainability,
all the actors that drive the hotel industry need to be considered. These actors10 should be
the primary designers of the indicators that will guide the industry along the requirements
of the triple bottom line. By including stakeholders in the design, there will be greater
accuracy in dealing with the challenges related to the TBL and greater drive built to raising
awareness of the importance of balancing the three principles.
Article 2 (Bocken, Short, Rana, & Evans, 2014)
A literature and practice review to develop sustainable business model archetypes
This article presents the inner-workings of sustainable business models and how they are
utilized toward creating new systems. ‘New Systems’ mainly comprises of two concepts,
changing the way one does business (Paradigm shifts & Business model redesign) and
combining efforts (In practicality, sustainability has a higher probability of success when
collaborative efforts are used). These inner workings are translated to Archetypes that are
groupings of mechanisms to solutions for business model development for sustainability.
In each of the 8 Archetypes, the article describes the Value Preposition, Value Creation &
Delivery and Value Capture. In relation to hotel business model design, using the
Archetypes could help in illustrating how value can be proposed, created and captured
through innovative methods that create new systems. The Archetypes are divided into
three groups namely; Technological, Social, Organizational. The technological Archetypes
include; Material and energy efficiency, Create Value from waste and Move to renewable
energy sources. When compared to the triple bottom line, technological archetypes
10 Stakeholders

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resonates the values in the environmental realm. Use of fewer resources, turning waste
into valuable input are forms of proposed value the reduced costs from these efforts can be
classified as the value capture which are applicable when considering re-framing of value.
From the social Archetypes, Deliver functionality rather than ownership, adopt a
stewardship role, Encourage sufficiency: Again comparing the social archetypes to the social
pillar from the triple bottom line, the idea is inclined toward servitization (Liu, Chen, Tu, &
Wang, 2014) where ownership of assets can be leased or rented ‘maximizing consumer use
of products’ and hence reducing raw materials and resources. Moreover, this archetype
extends to engaging stakeholders interests making the supply chain more transparent to
the consumer and hence reinforcing brand image and reducing risk. Typically the social
realm within the triple bottom line is concerned with the improvement of quality of life but
at the same time, can be a form of a revenue stream (value capture) through servitization
(Liu, Chen, Tu, & Wang, 2014). From the Organizational group the two last Archetypes,
Repurpose for society/Environment and Develop Scale-up Solutions. What these archetypes
offer are, focus on socio-environmental developments rather than pure economic gains
where delivery of beneficial sustainable solutions to society and the environment is
encouraged. Most companies today have a corporate social responsibility role they play in
society and these two archetypes try to capture and re-distribute value to society through
collaborative networks within local communities reinforcing the mediating role CSR plays
between firms and local societies.
Article 3 (Short, Rana, Evans, & Bocken , 2013)
A value-mapping tool for sustainable business modeling
This article explains the use of a tool that could possibly be used in aiding companies to
clearly define their business model. It clearly describes the Business modeling
fundamentals, and the rationale behind value capture, after
proposing, and creating value. The tool was envisioned with sustainability as the dominant
element influencing the other components that make up business model design. After the
tool was developed, it was tested among a spectrum of industries, from clothing, food,
footwear and agriculture among others to examine the effectiveness of the tool and to
determine in which areas it needed refinement. The results show that there was a need to
distinguish different forms of value. The tool conceives 3 concepts, Opportunities for new
value creation (Value for New Stake holders) Value Destroyed (Depletion of non-

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renewables, Negative social & Environmental impacts) and Value missed (Under-utilized
assets and resources). The tool’s design consists of 4 representations of value (Value
captured, Value destroyed, Value missed & Value opportunities) this aids the firm to
thoroughly explore their current situation as well as pointing out weaknesses present in
their existing model. Ten stakeholder segments were used to facilitate in a multi
stakeholder view of value proposed, and a perspective catered for the optimization of value
in a grid where all actors are considered in the design, production and distribution of a
service or a product. Though used as a teaching aid, it brings the aspect of the ‘shelf- life’ of
value and how it can be re-used and transferred, to various stakeholder groups. To further
add to the development of a sustainable business model for the hospitality industry, like
the article says, all actors that participate in the value network can make provisions for
added potential value through the 4 cyclic representations of value from the tool; in that
mutual and continual shared value is enjoyed through the network. The eight sustainability
archetypes are also used to govern the business modelling design process keeping it within
social, economic and environmental factors.
Article 4 (Matos & Silvestre, 2013)
Managing stakeholder relations when developing sustainable business models
In achieving sustainability, a lot of literature emphasizes the need for collaborations
between different entities. Another attribute towards bringing about sustainability in
business is that stakeholder management becomes of utmost importance, due to the fact
that there is a conflict of interests from the different stakeholder groups that should be
addressed when initiating sustainability. This article shows how stakeholder relations form
a key component of a firm’s strategic process to sustainability. The paper considers the
interdependencies of Economic, Environmental and Social relations between the
organization and its stakeholders. These interdependencies come, as a paradigm shift from
maximization of profits to addressing social and environmental needs. The authors found,
value created and generated resulting from sustainable business models encompass;
 Embedding economic, social and environmental discipline
 Promoting equitable relationships amongst actors
 Adopting a revenue model that represents a fair distribution of costs and
benefits (Boons & Ludeke-Freund, 2012)

16
Mentioned earlier, was the conflict of interest among different stakeholders, additional
constraints from social & environmental factors (Sustainable development) make the
business modeling process an even more difficult one. The Authors suggest, ‘In an
organization that operates to create sustainability values for itself and other stakeholders,
the values of the stakeholders need to be consistent with the vales of the organization.
Then, it may be possible to achieve a sustainable business model (Matos & Silvestre, 2013, s.
63)
Using the stakeholder theory (Freeman, Wicks, & Parmar, 2004), which advocates for
increased collaboration and participation of stakeholder’s in a firm’s operation, (tackling
the complexities that arise from addressing different stakeholder needs) managers are
advised to convince stakeholders to shift from single objectives to multiple objectives when
pursuing sustainability. This reduces a biased perspective of reality found in single
objectives and is more so discouraged as it will hinder the management of relationships
between stakeholders. Finding effective mechanisms to persuade stakeholders to shift to
multiple objectives will enhance the development of solutions/concepts that can later be
implemented in sustainable business model framing.
Article 5 (Chesbrough & Rosenbloom, 2002)
The role of business models in capturing value from innovation: Evidence from Xerox
corporation’s technology spin-off companies.
As Chesbrough & Rosenbloom’s business model structure will be incorporated in the
development of the thesis, it is necessary to show how its workings and components could
aid in improvising the development of the proposed sustainable model later in the project.
The conceptual framework that Chesbrough and Rosenbloom have developed mediates
between technological development and economic value creation. The six functions of the
business model are defined as;
 Architecture of the value proposition
 Identification of a market segment and specification of revenue generation mechanisms
 Define value chain structure required to create and distribute the offering & determine
complementary assets
 Estimate cost structure & profit potential of producing the offering
 Describe position of the firm within the value network linking suppliers and customers
 Formulation of the competitive strategy innovating firm will gain and hold over rivals

17
However, the authors argue the firm needs to understand the cognitive role of the business
model. ‘It requires linking the physical domain to an economic domain in the face of great
technological and market uncertainty’- (Chesbrough & Rosenbloom, 2002, s. 536)
The term fit here is of importance to a firm as it means adjusting their business model to fit
with a designated technology, hence the significance of understanding the cognitive role of
the company. Moreover, developing business models in environments characterized by
high complexity and uncertainty, Chesbrough & Rosenbloom present the notion of a
dominant logic put in place to reducing ambiguity and make sense of complex scenarios
faced by managers in the transition of inevitable and quite possibly radical change. What
the authors have presented is especially relevant for incorporating sustainability initiatives
into a business model design where the sustainability initiatives are viewed from the
technological domain governed by (but not limited to) a dominant logic, which in the case
of hotels would be dominated by service logic11. The authors have mentioned that the
dominant logic could constrain a firm’s sense making task and may come as a cost. The
price paid for the dominant logic is that it rules out the adoption of possibilities from other
business models that are significantly different from the current model. (Chesbrough &
Rosenbloom, 2002)
2.2
Interrelations of the two concepts and their application within hospitality
This section of the thesis attempts to merge business modeling and sustainability concepts
to conventional hotel operations. For sustainability to be successfully integrated within
hospitality, hotel operators should be encouraged to avoid the separation of sustainable
initiatives from hotel processes where the aim is to make these day to day activities as
efforts toward developing the initiatives. I have attempted to take these sustainable
business-modeling concepts to be as functional as possible within a hospitality setting.
As seen from the summary in article one, the process of adopting greener practices is
mainly achieved through the 36 indicators proposed by the authors. From the business
model perspective, the value preposition is to implement a system that minimizes
environmental damage whilst increasing social development (Employees, local culture,
local organizations). Creation of value is specifically achieved through environmental
11 Service logic in hotels is dominant in hotels as this comprises 100% of their
revenues

18
education targeted for employees and related stakeholders that in turn captures value
through tourist satisfaction, translating to economic benefits. Figure one also further
illustrates how the requirements in the UNTWO’s business model come as a collaborative
effort amongst all actors defined by the elements of the triple bottom line model.
Article two presents the concept of sustainable business model archetypes. These
archetypes are underpinned by the triple bottom line that forms the basis of value. The
value that is generated within the archetypes doubles as a paradigm shift to aid in
embedding sustainability into the business models. The concept of ‘paradigm shift’ is used
here to demonstrate the radical change firms need to address to be in a better position
when attaining sustainable practice within daily operation. The archetypes could very
possibly play a crucial role when being implemented within the parameters of hospitality.
Moreover, they will also aid in the provision of educating the spectrum of stakeholders,
whilst creating a platform where shared value can be realized.
Considering they have already been grouped to serve a technological, social and
organizational purpose, each role can be translated to solve the problems categorically
Figure 1: Conceptualization of HSBM. Sources, Journal of sustainable tourism Vol. 20, No.5, June
2012, P 703 (Mihalic, Zabkar, & Cvelbar, 2012)

19
within the TBL in order to establish where a hotel and its destination are losing value. The
archetypes will then be able to serve as the bridge toward achieving the specific desired
change.
Article 3 presents the notion of a value-mapping tool for sustainable business modeling.
The reason behind the choice of this article is that it takes the concept of business
modeling further to account for missed/wasted and opportunity (potential) value. Very
much like the notion of recycling, this business model concept aims to ‘re-use’ and
redistribute value amongst different stakeholder interests within an industry. With that,
the element of stakeholder interaction is imperative for the tool to be fully effective. When
being implemented to hotel settings, inclusion of the various stakeholder groups will be
crucial for designing the sustainable model. This will enable improved interaction
between different stakeholders and layout the value network of how it can be circulated.
The tool will also aid in the delivery of value to the end customer and double as a bridge
to how socio-environmental value translates to economic value. The archetypes and
value-mapping tool strengthen the foundation required for creating shared value and
define the sustainable processes that make it feasible.
Figure 2: Sustainable business model archetypes. Source, Nancy Bocken et al, Journal of cleaner production
65 (2014) P. 48 (Bocken, Short, Rana, & Evans, 2014)

20
Article 4 puts strong emphasis on the importance of upholding stakeholder interests for
sustainability. Though this isn’t the only article that shares the same sentiment,
sustainability initiatives have been proven to be more effective when stakeholder interests
are nurtured through collaborative efforts. Value here is extended beyond the parameters
of a firm, in a sense creating mutual beneficial value or shared value that is not only
through monitory terms. With respect to hospitality, the vast numbers of stakeholders
involved in delivering the hotel products are in many ways directly responsible for the end
product, their role in production remains very crucial. Managing stakeholder relations in
hospitality could be a difficult hurdle to overcome especially when trying to convince
individuals from different professional backgrounds the benefits of going green and solving
conflicts of interest. But for the sustainability vehicle to gain momentum, it will be
important for the hotel establishment to ensure that all the stakeholder representatives are
on the same page in achieving the sustainable objectives they set out achieve. By combining
tools such as the sustainable archetypes & value mapping, in conjunction with
Figure 3: Value mapping tool. Source, Nancy Bocken, Samuel Short, Padmakshi Rana and Steve Evans.
Corporate Governance Vol 30, No.5 P. 490 (Short, Rana, Evans, & Bocken , 2013)

21
collaborations, the process of managing these relations will be given much more meaning
as they become incentivized through mutual benefits.
Article 5:
Though this article does not explicitly show the interrelation of sustainability and business
models, there is an undertone suggesting that through innovation or the technological
pillar, the business model can create any form of value an establishment wishes to deliver.
In relation to the thesis the innovation here is interpreted as the sustainability objectives
that are integrated within hotel operations that eventually translate to positive economic
outcomes. This is the reason behind the choice of this article as the thesis is attempting to
demonstrate how hotels would operate governed by green business models. By delivering
value from the sustainable ‘technology’, the authors (Chesbrough & Rosenbloom, 2002)
describe how important it is to understand a firm’s cognitive role. Which in this case would
be the sustainable initiatives comprising of a combined use of physical technological
innovations and sustainable management practices that are designed to fit the business
model.
With respect to the dominant logic of a high standard of service delivery, there is
speculation over the quality of hotel service/amenities (luxury factor) being compromised
as a result of pursuing a greener profile. This is the probable ‘cost’ the authors described
about the dominant logic that blurs perception of pursuing sustainability causing
skepticism.
Figure 4: Chesbrough’s model mediating between technical and economic domains. Source:
Industrial corporate change, volume 11, no. 3, P 536 (Chesbrough & Rosenbloom, 2002)

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2.3
Conclusion to sub-question one; How have the interrelations between business model
and sustainability components been utilized in the literature?
Having reviewed this sample of articles, it is evident to see what components are necessary
for the development of a sustainable business model. In an effort to create and develop
value, establishing sustainable indicators that govern a firm’s performance of sustainable
initiatives should be implemented. Since the specific value generated will be three-fold
(Social, Economic & Environmental) the indicators will be generated to cater for each of the
dimensions. The indicators will not only raise awareness of sustainability issues, but also
offer continued improvement and constant supervision to ensure the momentum toward
sustainable initiatives is maintained. Though similar to sustainable indicators, business
model archetypes were designed with sustainable business modeling in mind. The
archetypes themselves are solutions that are developed to put sustainable business models
in practice. When used in-conjunction with the indicators, the archetypes clearly define the
value preposition, value creation, delivery and the value capture aiding in directly
connecting the business model elements to the sustainable initiatives. Moreover, the
archetypes preserve the innovation processes with research agendas toward further
developmental strategies for sustainable business modeling. Having defined the specified
value intentions through the indicators and sustainable archetypes, the value-mapping
tool plays a very important role in illustrating value distribution according to where it is
needed most within the value chain. The role of stake holder- relations comes to play as
all actors in the value chain are considered when value is stretched from the core of the
firm to the external network of stakeholders. For hotels to fully embrace sustainability, it is
vital for the firm to pay attention to stakeholder interests and by including them in the
development of sustainability initiatives. Use of the tool will then guide this network of
collaborations across the value chain to ‘match’ value with the appropriate stakeholder
group(s). This will also build on strengthening the relationship network of the industry
bringing different entities closer through shared value making solutions to problems faced
in operation as a whole, a team effort.
Finally the sustainability picture would not be complete without innovation, which plays
an important role in two ways, technologically and through management practices. These
two concepts drive the paradigm shift toward cleaner, greener, energy efficient and
reduced waste objectives. The collaborative network plays a big role in innovation it

23
includes research institutions that find innovative ways to generate value that contribute to
the sustainable initiatives. For the specific use in the hospitality industry, some of these
value forms created are geared to:
 Reduce waste that in turn preserves the natural environment
 Reduce energy and water consumption, which in turn saves money
 Recycling/reuse that saves resources
 Increase employee well being
 Fair trade
 Local economic development
 Encourage diversity
 Uphold human rights
 Boost economic performance
 Encourage transparency
 Practice corporate governance
Though the choice of the articles used in the thesis may seem limited, I feel that each of
them represents a theme vital for the development of a hotel sustainable business model.
Moreover, having looked at around 25 articles, there is a strong sentiment illustrating how
innovation, collaboration and stakeholder interests are in a sense mandatory for
sustainability to become embedded into a firms profile explaining how economic bottom
lines are met. And the choice of these five cover the themes sufficiently especially when put
into perspective of the hospitality industry.

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3
Measurement of current sustainable value within a Danish and Kenyan
context
3.1
The business model canvas
Alexander Osterwalder & Yves Pigneur developed a tool specifically for defining the value a
firm generates. The business model canvas is a simple easy to understand tool that has
incorporated all the complexities of how an establishment functions within a business
framework (Osterwalder & Pigneur, 2009, s. 15). The model is illustrated using nine basic
building blocks to describe the specific methods of how a firm intends to generate value.
With respect to the research objectives, I will use the business model canvas’s blueprint to
design a green model canvas for the purpose of measuring the current level of
sustainability presently in the of hotels I will study. This will also comprise the first stage of
my data collection to identify gaps12 related to sustainability. By re-adjusting the nine
blocks for sustainable value mapping within various hotels, this tool will aid in extracting
valuable data about whether or not hotels adopt sustainable practices and to what extent.
The use of this data will subsequently determine how the proposed sustainable model will
be envisioned. Here is how I intend to translate the blocks for measurement of
sustainability.
12 As the researcher, i would expect some level of sustainability but gaps here refer to
a more advanced level of sustainability with the application of the proposed model.

25
Figure 5: The business model canvas (Osterwalder & Pigneur, 2009)
Customer segments: Customers… considered the source of continual income for all
businesses remain the most influential stakeholder in the practice of commerce. Hotel chain
customers are typically divided into two groups, corporate & leisure (Sloan, Legrand , &
Chen, 2013, s. 216) both of which have a connection through the economic model of
hospitality. However there has been a major change of awareness in rising environmental
and social issues form just these two customer segments. The authors continue and state
that ‘the change in green thinking will demand hoteliers response to altered needs and
wants’ (Sloan, Legrand , & Chen, 2013, s. 216). The authors then describe a new market
segment called LOHAS an acronym that stands for Lifestyles of health and sustainability – a
227 billion dollar in the USA alone. This alternative lifestyle is described as one that appeals
to a segment of consumers who value health, environmental conservation, social justice and
sustainable living. (Sloan, Legrand , & Chen, 2013, s. 222)
Again with reference to the authors, the industry has been able to categorize such
consumers with the LOHAS mentality as eco tourists and responsible tourists.
The authors continue and clarify how attitudes, intentions and consumption of consumer
behavior substantially support sustainable initiatives of hotels. The authors argue, to
encourage consumption in line with environmental protection and social equality, individuals
must be convinced their actions are positively supporting these issues - (Sloan, Legrand , &
Chen, 2013, s. 221)

26
Considering how market segments may influence a hotel’s sustainability position, I as the
researcher feel it necessary to find out the following:
In what categories have you segmented your market share?
What percentage of your market share appears to care or is aware of
sustainability issues?
What portion of your market share has influenced your establishment to pursue
sustainable initiative(s)?
Value prepositions: Going with Osterwalder’s and Pigneur’s definition of a value
preposition, which is satisfying a customer need through products and/or services that
caters to the requirements of a specific customer segment. Value prepositions can also be
perceived as a collection of benefits a company offers to its customers. (Osterwalder &
Pigneur, 2009, s. 21)
With respect to sustainability in hotels and delivering value, there is speculation about the
quality being inferior as some of the sustainable initiatives involve cutting costs. The
authors (Sloan, Legrand , & Chen, 2013) quote Stipanuk (2002, p.112) who says ‘Some
hospitality managers believe that certain environmental actions may result in negative
customer reaction’ he suggests test marketing and educating guests on environmental
behavior could aid in reducing any doubts and negative feelings. (Sloan, Legrand , & Chen,
2013, s. 222)
In contrast, with the LOHAS (Lifestyle of health and sustainability) lifestyle gaining
momentum within the hospitality industry, the authors have made some theoretical
considerations regarding responsible consumption. Internal control mechanisms,
distinguish individuals who believe their actions are a cause of a given situation. (Sloan,
Legrand , & Chen, 2013, s. 220)
Naturally, these individuals will seek products and services that correspond to their
attitude. Environmental protection, social justice and equality, support of local economies
and similar initiatives will be favored. (Sloan, Legrand , & Chen, 2013, s. 221)
On the flip side, external control mechanisms, describe how individuals believe that
external factors control their behavior, the more their consumption will be out of line with
his/her attitude. (Sloan, Legrand , & Chen, 2013, s. 221)

27
These considerations were important to illustrate as it influences how sustainable value
can be proposed. Through making the consumer a part of the initiatives, the ‘control factor’
is made more apparent to the consumer. Coupled with the education to raise awareness of
the beneficial outcomes of the proposals, the value generated becomes clearer.
What value prepositions have been made for your consumers?
Do your value prepositions incorporate sustainable initiatives?
Do you believe pursuing sustainable initiatives increases the value you generate?
Do you believe (your) sustainable initiatives help satisfy a customer need(s)?
Channels: Alexander Osterwalder and Yves Pigneur describe this building block as the
communication mode used by a company to inform its consumers on the value preposition
it intends to deliver. The authors have also divided the channels into 5 phases (Osterwalder
& Pigneur, 2009, s. 27) that monitor certain aspects of a product or service. These phases
include
1. Awareness: Raising awareness about its products and services
2. Evaluation: Aiding customers in evaluating the firm’s value preposition
3. Purchase: Purchase of specific products/services
4. Delivery: Deliver value prepositions to customers
5. After sales: Post purchase customer support
For the most part, customer reach within hospitality is achieved through travel agents and
Internet aided direct bookings. Gaining increasing popularity now is the Internet aided
bookings where the client will book their destination and choice of hotel independently,
simultaneously using platforms like tripadvisor to base their final purchasing decision on
reviews previous guests have posted. Trip advisor can be looked as a ranking tool showing
how well an establishment performs based on customer reviews. (Having worked in the
industry for 5 years, this is my own input and experience)
But keeping in consistency with sustainability, the American Marketing Association (AMA)
defines the concept of green marketing entailing three parts.
1. The marketing of products that are presumed to be environmentally safe.
2. The development and marketing of products designed to minimize negative
effects on the physical environment or to improve its quality.
3. The efforts by organizations to produce, promote, package and reclaim
products in a manner that is sensitive or responsive to ecological concerns.

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This definition of green marketing is not intended to discourage consumers from
consuming more but rather, responsibly. By utilizing the right combination of channels,
green marketing can aid in changing spending patterns and redefining quality standards to
sustaining company/brand image. (Sloan, Legrand , & Chen, 2013, s. 192) For this reason I
find the following question relevant:
Through which channels do you get your customers?
How do you make customers aware of (your) sustainable initiatives?
Are (your) sustainable initiatives used as part of (your) marketing-
communication?
Would you be inclined to believe this have an increase or decrease on (your)
market share?
Customer relationships: The customer relationship building block is pretty
straightforward. The authors describe it as motivation for customer acquisition, customer
retention or boosting sales. Moreover, the authors add that customer’s experience has a
direct link to the type of relationship that has been established. (Osterwalder & Pigneur,
2009, s. 28)
Maintaining customer relationships within the hospitality industry remains one of the
important if not, most important factor in keeping an establishment afloat through repeat
guests. When looking at sustainable initiatives in particular, co-creation can be
implemented where value can be co-created with customers (Osterwalder & Pigneur, 2009,
s. 29) doubling as a strategy in educating them on responsible consumption by being a
knowledge resource for customers, suppliers, and all stakeholders brining them within the
company’s sphere of influence (Sloan, Legrand , & Chen, 2013, s. 202). This could also build
on the value preposition in educating guests on the sustainable initiatives through co-
creation strategies that should increase the value of the guest experience.
What type of consumer relationship do you maintain with your customer
segments?
Does your relationship with any of the segments involve their input (or have
suggested) in sustainable initiatives?
Are any of the relationships based purely on sustainable initiatives?

29
Revenue streams: The revenue stream within the hospitality industry is categorized as
usage fee where revenue is generated by the use of a particular service. The more the
service is used, the more the customer pays (Osterwalder & Pigneur, 2009, s. 31).
This has traditionally been the main mode of income since the inception of the industry.
Over the years the industry has flourished but at the expense of high-energy costs, which
requires hotel operators to pursue energy efficiency as one of the factors that induces
sustainable practices. However, hoteliers are faced with the dilemma whereby money must
be invested so as to save money in the final analysis (Sloan, Legrand , & Chen, 2013, s. 327).
The revenue stream with respect to sustainability in hospitality has only offered the cost
saving implications. But since sustainability is in its infancy within hospitality, strategies
can be developed to open new avenues that could have the potential to generate new forms
of revenue.
What type of revenue stream do you employ?
How much of your revenue streams contribute to sustainable initiatives?
Would you be inclined to think that your customer segments would pay a
premium prices for sustainable initiatives?
Would you be inclined to think that sustainable initiatives (such as energy saving
strategies) would have cost-savings implications?
Key resources: Resources make an integral component for making possible the delivery of
value prepositions to various customer segments. These resources can be interpreted as
physical, financial, intellectual or human. All of which can be owned, leased or shared by
key partners (Osterwalder & Pigneur, 2009, s. 31).
Key resources within the hospitality vary from destination to destination with each
property having a unique set of assets. However, regarding the adaptation of a sustainable
profile within an establishment, resources geared to this kind of achievement take a
slightly different direction. These resources would typically be allocated for initiatives that
encompass technological/ innovative support, management styles and collaborations.
Moreover, an investment plan should be set up that would allow for the growth and
development of specific sustainable initiatives. It would be interesting to find out the
following;
What key resources are required for delivering value?

30
To what extent are your resources utilized for sustainable initiatives?
Is there system set to direct financial resources to support sustainable initiatives?
Key activities: Considered the most important actions a company must take to operate
successfully, the authors argue like resources they are required to create and offer a value
preposition, reach markets, maintain customer relationships and generate revenues. These
key activities, like key resources differ depending on the business (Osterwalder & Pigneur,
2009, s. 36).
With most hotels having similar activities that are typically centered on guest’s satisfaction,
differences may vary to some degree when activities entail the pursuit of a more
sustainable profile. Some of these specific activities would prioritize the following:
1. Re-shaping core business philosophy that extends to social, environmental and
economic initiatives.
2. Enlarge the sphere of influence; to include external players
3. Embrace sustainable practices
4. Educate the team; both staff and guests
5. Review communication;
These activities are viewed as part of the efforts to aid in the integration of sustainability
into the organizational culture of the establishment (Sloan, Legrand , & Chen, 2013, s. 27).
With hotel guests becoming increasingly aware of the LOHAS (lifestyle of health
sustainability) it would be interesting to find out to what extent hotels have adjusted their
key activities to meet the demands of such a customer segment.
What comprises your key activities?
Do your key activities entail any sustainable initiatives?
To what extent have you changed your key activities to fit a greener profile?
Key partnerships: The formation of partnerships between companies can be for a number
of reasons but it’s primarily for a mutual benefit/ shared value outcomes. The authors
distinguish four different kinds of partnerships (Osterwalder & Pigneur, 2009, s. 38):
1. Strategic alliances between non- competitors
2. Coopetition: strategic partnerships between competitors
3. Joint ventures to develop new businesses
4. Buyer-supplier relationships to assure reliable supplies

31
For sustainability to thrive, collaborations/partnerships with other actors is key. As this
could strengthen the resource base, mitigate risk and uncertainty among others. But more
to the point, establishing partnerships with sustainability as a common motivator increases
the chances of successfully making their sustainable initiatives operable. This also
increases the combined influence they have on related actors within the same industry.
Depending on the strength of the influence, collaborations/partnerships can put pressure
on other actors to start adopting green initiatives thus expanding sustainable practices.
Do you have any key partners/ suppliers?
What key resources are acquired from your partners?
To what extent do these resources involve sustainable initiatives?
Has your establishment had any influence on these sustainable initiatives?
Cost structure: These are the costs incurred from running a business model. These costs
can be calculated relatively easily after accounting for key resources, key activities and
partnerships. However there are two concepts that influence and determine the type of
business model based on the cost structure. These concepts are cost-driven and value
driven. Depending on what the company wants to achieve, it is imperative to make the
distinction as these have an adverse effect on the value preposition, key resources and key
activities (Osterwalder & Pigneur, 2009, s. 40). (Wangui, 2016)
With reference to sustainability in hospitality, the reduction in waste, consumption of
electricity and water whilst at the same time encouraging recycling, in many ways equates
to costs savings hence resonating with a cost driven model. However, compromising on
guest services and comfort is an issue most properties would not want to tamper with,
value driven models keep the provision of services of the like intact. The most ideal
scenario is to keep guests satisfied and simultaneously have cost saving measures where
possible.
What are the most important costs in your establishment?
Are you inclined to believe that sustainable initiatives are expensive?
Are you inclined to believe that sustainable initiatives can in the long run, save
you money?
How would you say sustainable initiatives have saved you money?

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3.2
Data findings of sustainability in Kenyan & Danish Hotels
Acquisition of data concerning sustainability within hotels can be very controversial. My
experience trying to get data of this nature, has proven to be difficult, as many hotels are
not prepared to openly share this information especially when it comes to the
shortcomings they may have regarding sustainable practices. However, having worked in
the industry for four years, I have taken into consideration this obstacle and tried as much
as possible to ask questions that do not directly appear to be criticizing, but rather take a
neutral stance and observe the strengths and weaknesses of their initiatives and the
relationship they have with business components only offering a ‘solution’ in chapter 4 that
presents the sustainable business model. I chose the business model canvas blueprint to
form my questionnaire for two reasons. One, its simple design makes it relatively easy to
understand the business model rationale thus keeping within the theme of the thesis that
aims to generate a sustainable business model. Two the business model canvas design
makes it applicable for all industries with that I made slight adjustments within the nine
blocks to make a tool that measures sustainability amongst all business components within
hotels. The findings will also be formatted in the same fashion. There are six interviews in
total. Three from Kenya and three from Denmark to mainly observe what is considered
important versus what is not with regard to sustainable practices. The interviews range
from 35- 60 minutes where in depth interviews have been used to acquire this qualitative
data.
Data findings from Kenya
Joyce Wangui, Executive Sales Manager Nairobi Serena (Wangui, 2016)
The first section dealt with customer segments, where Serena typically has segmented
their market share between the corporate traveller and the leisure traveller. It is estimated
that over 70% of leisure travellers (1,631 guests) are concerned about sustainability issues
who are keen in participating in any programs pertaining to sustainability like
conservation initiatives. With respect to the corporate traveller, some have set a very clear
standard as to what is expected from hotels regarding sustainability and it was estimated
that 50% of the corporate traveller (5,688 guests) shows concern towards a hotel’s

33
sustainable initiatives. Considering their response to clients influencing these initiatives,
Joyce stated that Serena group had a business model that is very customer sensitive and is
largely influenced by global and market trends however, their sustainable initiatives comes
from them practicing corporate social responsibility and is not done purely to appease
their clientele. Value prepositions at Serena Hotels are characterized by providing
comfort and personalized services that give ‘a home away from home’ feeling. These value
prepositions with regard to sustainable initiatives are governed by the three R’s principle
(Reduce, re-use and recycle) that extends to their hotel operations. Examples Joyce gave
include the re-using of bed linen giving the guests a choice to have the same bed linen for a
few nights or changing them every night, either way this would impact the water and
electricity consumption rates. Recycling of shampoo and lotion containers is another
example where waste is reduced. Where rooms are not occupied, power is switched off
supplied to utilities such as air conditioning to save on energy. Moreover, their waste
management system ensures all waste is sorted and separated for recycling purposes.
When asked whether she thought these sustainable initiatives increased the value it
generated for guests, her response was not directly to the guests stay but was
substantiated by the effect these initiatives has on the local communities. Examples given
ranged from food waste given to pig farmers, small soap tablets are collected and provided
to children’s orphanages for soap production that they later sell. This in turn gives their
guests a ‘feel good factor’ knowing that choosing to stay at Serena contributes to the
economic welfare of local communities. The communication channels used by Serena
hotels are through their website, brochures that incorporates an environmental mission
statement declaring sustainable practices on all marketing and promotional material.
Moreover, these sustainable initiatives are also communicated through activities that
involve their guests for example, tree-planting programs that are in the final analysis,
communicated as part of their marketing. Joyce further mentions that these initiatives do
influence an increase in the market share through guest involvement as they do appreciate
to participate within such events that inherently enhance the bond between the hotel and
its guests.
Customer relationships is considered by Serena to be their biggest strength where they
have had repeat guests for up to 15 years by simply nurturing relations to keep clients
coming back. There is however no relationships that are based purely on Serena’s
sustainable initiatives but their guests have subtly directed them towards a greener path.

34
An example where a guest has mentioned is where their air conditioning does not need to
be on when they are not in the room.13
Serena’s revenue stream is split into two the sale of bed nights and the sale of services
charged on consumption basis. After taxes have been paid the revenue allocated to
sustainable initiatives is estimated to be around 3-5 %. Joyce having been in sales and
marketing for some years, I asked if she was inclined to believe their customers would pay
premium prices based on their sustainable initiatives, responding with only a minority
would as these initiatives are not a priority for the majority of their clientele and in
addition, many of their customers are in fact influenced by pricing. She also mentioned that
cost savings implications stemming from sustainable initiatives could have a direct benefit
to the client in relation to pricing. The Key resource for Serena hotel is primarily the
human resource as it is key for delivering their personalized services mentioned earlier in
the value prepositions. Resources that are channeled towards sustainability in Serena
include investments for water treatment plants, centralized water heating system (from
the laundry department) biodegradable setups as examples of facilities that support the
protection of the environment. There are also trainings for the staff that empower them to
make decisions regarding sustainable practices an example was given where trainings help
staff recognize the separation of waste. Annual budgetary allocations are used for investing
in sustainable activities that was estimated to be 3-5% as mentioned earlier. Key activities
conforming to sustainable practices are present within Serena where effort focused on
environmental and social impacts is reflected on daily operations; these come in the form
of conservation programs like the tree planting programs that involve the guest’s input as
part of responsible business practices. Joyce explains that they strive to find newer and
more efficient ways to deliver the same services only altering the processes (with new
technologies that are more environmentally friendly) of the way their services are
produced.
Key partnerships are formed between certification bodies that carry out external audits
to ensure that they are in fact compliant with policies that govern green practices. When
looking at their suppliers, Serena does not influence them to practice sustainability within
their businesses but she mentioned that they would be inclined to select the suppliers that
do. The shared value created from partnerships as a result of pursuing sustainability, keeps
Serena updated with knowledge on best practices and from the supplier side, keeps
13 Where energy saving measures are subtly implied

35
transactional interaction constantly active with the hotel, ensuring continued business. But
on the condition that they remain dynamic, innovative and updated with sustainable
practices to continue being a primary supplier. It was implied that these suppliers do take
Serena’s inclinations seriously showing the influence the hotel has over its suppliers.
Human resources dominated the cost structure for Serena where staff health, well being,
trainings and remuneration comprised the largest cost. There are instances where
expensive investments are made directly in technology that aids in reduced consumption of
electricity illustrating how they can save money in the long run. Joyce confirms that the
cost of utilities such as water and electricity have been greatly reduced as a result of
operating with technology that enhances controlled usage. Another example worth
mentioning is the tree planting project carried out helped save the cost of refurbishment on
one of their lodges in Tsavo14 as it was now better protected from the elements that would
have otherwise been very expensive to renovate. In these respects, sustainability has
proven to save money.
Sujit Shah, Hotel Intermediary between Scandinavia and Kenya15 (Shah, 2016)
The Market share here is divided between business traveller (short and long term) and
the leisure traveller where 50-60% of their combined market share is aware of global
sustainability issues. Sujit explains that 100% of their market share influences them to
pursue sustainable initiatives that are mainly concerned with communal developmental
aspects; that caters to the local villages welfare through environmental and social
initiatives coupled with some infrastructural developments like electricity, transport, clean
water. There are also campaigns that try and introduce certain technologies16through
investors that would consequently further advancement.
Their Value prepositions are about giving their guests an experience. One way this is
achieved is by hiring employees from the local communities who in turn reflect elements of
their culture that adds authenticity to the product. The reflection of culture consequently
‘educates’ the guest about the destination essentially adding value to the experience. Sujit
14 Game reserve in Southern Kenya that hosts Kilaguni Serena Safari Lodge
15 Absolute Figures were unfortunately unavailable here
16 Technologies related to renewable energy production

36
believes their sustainable initiatives increases the value generated for their guests, as it is
much more than just saving costs and caring for the environment. These initiatives they are
involved in seek to improve quality of life for local inhabitants by respecting their laws and
customs, investing in their communities that in turn creates a platform that improves and
develops a destination that empowers the locals economically. The customer’s needs are
satisfied in two forms; from the experiential factor and from the positive effects the socio-
economic initiatives have had on local communities. The communication channels
utilized by their properties rely on word of mouth where a family member or friend has
referred 80% of their guests to these hotels moreover, there is hardly use of advertising.
Their sustainable initiatives are made apparent to the guest through out their stay as they
are shown first hand, the positive impacts these hotels have on local communities. There is
an element of advertising that is done through the travel agents. Sujit clarifies that despite
giving a description of the physical characteristics of their properties, they go on to explain
the projects they undertake to improve local destinations and their involvement in local
communities. This aspect draws a better picture of the experiential factor that defines their
products as a unique selling attribute. He mentioned they have both experienced an
increase and decrease in their market share as these values they have in place, have
attracted new clients with the same sentiments but have however, lost some that do not
feel as passionate about these initiatives. This indicates a need to educate potential clients
about the benefits of sustainable initiatives. Revenue generation for these properties
works very much the same as any other conventional hotel, where a usage fee is
implemented and charging is according to consumption. Trainings and environmental
education are categorized as their investments towards sustainable initiatives. Sujit
believes empowering the staff with knowledge creates a platform where skill equates to
economic benefit that comes back to investing in the social pillar that is vital for driving
sustainability.
Sujit mentions that they have established a market segment that embraces sustainability
that he believes will be willing to pay premium prices based on the core values that are in
sync with that of the hotels. The key resources for them are categorized as financial,
human, water, land and intellectual. All are used in combinations that aim for the
development of social well-being through initiatives. An example of these initiatives
includes the building of a clinic that contributed to local development. Sujit adds, from a
Kenyan perspective, return on investment is higher when funds are directed towards

37
education rather than facilities as the latter has a tendency to breakdown and replacements
can be expensive overtime. Consequently, the choice of knowledge over technology has
proven to be more effective than technology in their case. Their Key activities are
providing authentic services through unique experiences from cultural exposure, and guest
involvement in initiatives. This in turn has attracted more clients explaining the process of
revenue generation and communication within their destinations by primarily focusing on
social developments as the main constituent of their sustainability profile. Partnerships
are made between tour-operators and travel agents and over 300 direct contractual
partnerships where 100 are key to their operations. They enjoy joint marketing; where the
agents aid in expanding the hotel market share and the hotels help build the travel agency
brand by being part of their portfolio. Their cost comprise labor, use of electricity and
water but as Sujit puts it, is still too early to measure the cost saving repercussions based
on their sustainable initiatives.
Ms Waturi Matu, Co-coordinator East African Tourism Platform (Waturi, 2014)
Though Ms. Waturi does not work for a specific hotel, she gives a Kenyan perspective on
the current situation of sustainability in hospitality and the future implications it has for
gaining momentum. Given her position in the East-African tourism platform, she is well
versed on how various hotel types in Kenya that embrace sustainability and mentions the
problems faced when adopting greener practices. Codes of conduct were the first on the
agenda. With regard to sustainability within hospitality, codes of conduct are created from
a hotel’s own initiative. Eco-tourism Kenya (Ecotourism Kenya, 2005) is the only body that
carries out external audits on hotels to primarily measure their impacts on local
communities and environments that also aid in ensuring policies are adhered to when
pursuing sustainability. The hotels that are in membership with Eco-tourism Kenya use it
as a marketing tactic to differentiate and rate themselves from other hotels, which are very
low in number confirmed Ms. Matu.
From the Environmental perspective, many hotels are beginning to phase out the use of
generators (for electricity) implementing solar panels and water recycling initiatives.
Disposal practices are developing where classification of waste is of high priority. Ms. Matu
adds, that sustainable initiatives are more apparent in lodges and safari camps (Bell &
Bristow, 2013, s. 381-382) that are typically not supported by infrastructure when
compared to city hotels in Nairobi. This is as a consequence of the emergence of private

38
conservancies who take it upon themselves to protect the diminishing numbers of wildlife
and the environment they live in.
From the social aspect, conservancies are privately run but have leased land from the local
community creating a revenue channel that is additionally supplemented by a percentage
for every room night sold. To further their development, the local inhabitants are trained
and given employment opportunities within the conservancies. The effect of this
community involvement has reduced human-wildlife conflicts as they work in
collaboration with the conservancies in protecting and preserving ecosystems through
trainings.
Ms. Matu explains it is easier for the smaller lodges and camps to adapt sustainable
practices because of their size and the drive to pursue sustainability is higher for them as
there are marketing implications used for differentiation. Adoption of substantial
sustainable practices within the larger city hotels becomes a more complicated affair she
adds.
Ms Matu clarifies that the current trend with sustainability is that properties are
implementing these practices on a voluntary basis creating a gap17 and governments have
a role to play in developing and applying policies to the industry that in effect makes them
start adopting sustainable practices. She adds that within a city scenario, there is no real
incentive and a lack of awareness to start going green making hotel owners adamant
towards embracing change.
Ms Matu, using the Kenyan coastline as an example has properly demonstrated the lack of
awareness. Mombasa, a favorite tourist destination, and was unfortunately not sustainably
planned as a destination. Building of large luxurious establishments and their combined
daily operation has had devastating environmental effects as waste management had not
been properly executed and organized where a number of hotels have been reported to
have dumping their waste into the sea. The Mombasa product has been adversely affected
by the threat of terrorism and over-congestion with high human traffic from the many
hotels that the city hosts, seeing a decline in tourist numbers. She suggest that the Kenyan
hospitality industry needs to be incentivized with a good communication mechanism that
shows the benefits (to property owners) towards a greener direction that in essence,
necessitates sustainable practices. She concludes the interview by stating how
17 As compared to establishments that are not involved in any sustainable initiatives

39
governments can further incentivize sustainable practices by removing tax on importation
of these technologies that support sustainability.
Data findings from Denmark
Tanja Lykkebak former Bars Manager at Scandic Hotels18 (Lykkebak, 2016)
Market segmentation at Scandic hotels, constitutes 70% business and 30% leisure as an
overall annual figure. Tanja gave a rough estimate of about 25% of their market share
seems to care about sustainable issues as corporate social responsibility is used as part of
their marketing. Tanja mentions, it is mainly the business segment that has influenced their
direction in green practices as some of them work directly with sustainability Scandic then
in turn, provides services that are in resonance with the core sustainable values of some of
these companies. Value prepositions generally entail providing personalized services
where Scandic trains staff to utilize a technique (Guest recognition association) that
enables them to remember all guests’ names making them feel valued. Health and fitness in
Denmark is of a high priority for many individuals and the hotel offers organic locally
produced food as menu items that respond to the health and fitness factor echoing the
social aspect within sustainability. Other sustainable value prepositions implemented
include the use of L.E.D19 lamps; use of energy saving televisions and no sale of plastic
bottled water. It is instead distributed in re-usable glass bottles consequently reducing
waste. Tanja explains, their Scandinavian market share is seemingly aware of sustainability
issues and she believes they increase the value they deliver at Scandic as their initiatives
help in satisfying the needs of this market share. Channels for communication to their
market share are primarily web-based where online travel agencies aid with hotel
bookings. Communication concerning their sustainable initiatives is not used as part of
their marketing but the guests are only made aware of them during the duration of their
stay. Tanja believes their Scandinavian market share would increase should they
implement sustainability as part of their marketing communication. Customer
Relationships at Scandic hotels are considered to be of a close nature as they try as much
as possible to get feedback from the guests experience on improving their product.
However, no inputs from guests are concerned with sustainable practices. There is the
unique relationship established between the hotel and sustainable companies such as
18 Absolute figures were unfortunateley unavailable here
19 Light emitting diode- an innovative bulb that is very low in consumption

40
Vestas20 who choose to use hotels like Scandic based on common sentiments they have
towards sustainability. Revenue streams are very much in the same method as most
hotels globally where money is earned from the provision of food, beverage and
accommodation facilities. With regard to charging premium prices because of sustainable
initiatives Tanja believes that their market share will not be willing to pay more as price is
an important factor used to attract and maintain market share. Their revenue streams have
also been positively affected, as they have been able to establish savings from energy costs
realized through green electrical technology. Their Staff, hotel facilities and supporting
infrastructure is characterized by key resources at Scandic. The resources that are used to
support their sustainable profile are solar panels, L.E.D lighting and trainings that ensure
their staff maintain sustainable management practices pertaining to use of resources and
controlling waste.
Other than tending to guests needs, the Key activities at Scandic is to create a culture of
sustainability within the staff through trainings that ensure consumption of electricity and
water are monitored, whilst keeping waste to a minimal level. Scandic hotel, also sources as
much as possible for organic foods that have been locally produced ensuring their
freshness not to mention lower transportation costs also resulting in lower carbon
emissions. Partnerships have been made with Finn air and SAS that allows their
clients/guests to accrue points allowing them to either fly (with SAS or Finn air) or stay (at
Scandic) within the Scandinavian region. These points accumulated allows the guests to
enjoy these services at a discounted rate through a point sharing system designed by the
partnership to increase market share. The partnerships Scandic has established with its
suppliers has been influential in that there has been an increase in the provision of organic
food items, Tanja explained how pressure has been put on suppliers to meet sustainable
requirements set by Scandic validating the extent hotel influence has in the value chain.
The Costs of operation at Scandic are wages, rent21 of the building and utilities. In 2013,
Scandic experienced a loss from the heavy investment made on the L.E.D lighting and
purchase of energy saving televisions, as an effort to cut electricity consumption proving
that these initiatives can be initially costly. Tanja confirms that the combined use of these
20 Vestas is a company that produces windmills for the generation of electricity
21 A servitization role plays here as the construction of a hotel along with
environmnetal degredation is avoided by the use of an exisitng building

41
technologies have already shown a reduction in energy consumption and more so, the costs
of running the hotel.
Karim Nielsen CEO Brøchner Hotels (Nielsen, 2016)
Customer segments at Brøchner hotels is divided into corporate and leisure where it has
been equally distributed on a 50/50 basis as there is a new trend where people tend to
work whilst on holiday. Karim estimates that at least 80% (128,000 guests) of their market
share expects them to work with environmentally caring projects. Brøchner hotels work
with Green Key (Green Key, 2014) a certification body that ensures establishments
incorporates environmentally sensitive procedures alongside aiding guests to make an
environmental difference when staying with green key certified hotels. According to Karim,
the corporate market have made Brøncher hotels start focusing on sustainable issues
which has made the establishment consider the extent they should use sustainability as
part of marketing communication. The Value propositions entail passion, care and
responsibility where the guests’ experience is prioritized and closely monitored to ensure a
pleasant stay. In connection with sustainability, Brøchner hotels provide an organic
breakfast that appeals to the healthy side of their guests but are not restricted from
ordering sausages and bacon if requested. Rooms are fitted with up to date technology that
saves on the consumption of electricity and water without compromising guests’ comfort.
Karim clarifies how sustainable initiatives are more present within the F&B when
compared to the rooms as he says explaining to the guest about saving water, soap, towels
and other such like amenities is avoided as it becomes a delicate matter when they have
paid a full price22. This becomes a communication challenge pertaining to their sustainable
initiatives. Communication Channels utilized are done by the hotel’s own website, Online
travel agencies and a booking department that is specifically for group packages. No
advertising is used that incorporates sustainable initiatives however; Karim believes
communicating these sustainable initiatives will have an increase in their market share.
Customer relationships are based on making their Hotels a second home they try as much
as possible to connect to their customers through loyalty programs that encourages a
22 The cost vs. luxury factor comes into play where; the guest may feel the hotel is
compromising quality to pursue sustainable initiatives despite the fact they have paid
full price. The sentiment is having full entitlement to amenities and services without
limitations

42
friendly, connected relationship. There is no input from guests nor are there any
relationships based purely on sustainable initiatives. Revenue streams are divided by
rooms 78%, breakfast 11% and bar 10%. The largest investment toward sustainability
would be the energy saving technology that regulates consumption of electricity in the
rooms that is followed by the procurement of organic food items used in serving breakfast.
There is no set plan that reinvests back into sustainable initiatives, but Karim believes that
it would be a substantial amount if it were in place as these would in the long run, have cost
saving implications. Karim however believes, that charging premium prices to consumers
because of sustainable initiatives should be avoided as price is crucial for attracting
potential clients. Key resources for Brøchner hotels are human and technological that are
key to the service delivery as these offer the support that monitor consumption levels that
aid in meeting certain environmental criteria. Other than tending to guests needs, the Key
activities with respect to sustainable practices comprise the monitoring and control of
heat, light and electricity coupled with the procurement and production of the organic
breakfast. Karim explains being a young company; corporate social responsibility has not
been properly established limiting participation within sustainable initiatives. Key
partnerships have only been made with suppliers where an arrangement to deliver once a
week has had positive implications on the environment by reducing the carbon footprint
incurred from transportation. There is no influence from the hotels’ side onto the suppliers
concerning their sustainable practices, as the provision of organic food items is the only
requirement. Costs are dominated by staffing and on his newer buildings; Karim says their
energy costs are not as high when compared to their older buildings, as the technology is
available to monitor and control consumption of utilities. He doesn’t believe investing in
sustainable initiatives are expensive because the implication it brings to the bigger picture
translates to substantial savings. They have already seen savings on heat, light and power
in the short time they have been running as the right technology has been implemented.
Mireille Jakobsen group CSR Manager at Crowne Plaza Hotel, (Jakobsen, 2016)
As Crowne Plaza is primarily a business hotel, customer segments are divided between
conference guests and airline crew. The leisure guest does feature as part of their
segmentation, but are not the majority. Crowne plaza has been trying to put a number on
what percentage of their market share seems to care about sustainability. They measure
this dynamic through the number of request proposals, that feature sustainability issues

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