Environmental quality and its impact on business performance of the bed and breakfasts (B&Bs) industry: Evidence from Taiwan

Abstract

It is well known that proactive environmental strategies can affect the business performance of the hotel industry. However, very few research has focused on the B&B sector. This paper aims to fill this gap and explores the relationship between environmental quality and the business performance of B&Bs. This research adopts the Air Pollution Index (API), as well as the volume of garbage generated per capita and the volume of recyclable waste generated per capita as proxy variables of environmental quality, to examine the impacts on business performance such as occupancy rate (OR) and average daily rate (ADR) for the B&Bs industry in Taiwan from 2009 to 2018. The results show that there is a positive significant relationship between the volume of recyclable waste generated per capita and the B&Bs’ ADR, and an inverse significant relationship between the volume of garbage generated per capita and B&Bs’ OR. Furthermore, locating on outlying islands significantly increases OR, which may reflect under supply or higher demand elasticity for B&B services in those areas. These findings contrast to the literature by highlighting that the difference in business models between hotels and B&Bs can affect the impact of environmental commitment on their business performance.