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Environmental and financial performance in Thailand’s hospitality industry: a longitudinal analysis

Kavitha Haldorai,W. Kim,Kullada Phetvaroon

Published 2025 in Journal of Hospitality and Tourism Insights

ABSTRACT

Drawing on the theory of eco-efficiency and the resource-based view, this study examines the association between environmental and financial performance in Thailand’s hospitality industry. It also explores the non-linear dynamics of this relationship. This study employs a panel fixed-effects regression model with lagged independent variables to test the relationships between environmental and financial performance over time. The dataset includes Thai hospitality firms actively participating in the hotel carbon footprint calculation program between 2021 and 2023. The analysis further incorporates polynomial regression to examine the non-linear relationship. The analysis reveals that environmental performance is positively associated with financial performance, and vice versa. These results suggest that while sustainability efforts may incur short-term costs, they offer tangible financial returns over time. Furthermore, instead of the proposed S-shaped curve, the data reveals an N-shaped relationship between environmental and financial performance, suggesting that initial gains may be followed by mid-stage declines before eventual recovery. The study provides actionable insights for hospitality managers by emphasizing the importance of strategic environmental investments. While sustainability initiatives can yield financial benefits, excessive investments without differentiation may lead to diminishing returns. This study contributes to theory by demonstrating that sustainability-performance relationships may follow non-linear and dynamic patterns not captured by traditional models. It emphasizes that even among green hotels, short-term trade-offs can occur particularly in resource-constrained, emerging market settings.

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