Circular economy in the hospitality sector: evidence from Italian SMHs

Environmental, social and governance (ESG) practices are becoming increasingly essential to promote sustainability in the tourism and hospitality sectors, and thus progressively facilitate the shift to circular economy models, including for small and medium-sized enterprises (SMEs) that play a key role in this market. However, while ESG adoption offers benefits, such as increased operational efficiency, improved reputation, and resilience against demand volatility, SMEs in the hospitality sector face challenges and barriers that often hinder effective ESG integration. As found in previous research focused on a systematic literature review, the studies have predominantly focused on large companies in the tourism and hospitality sector that generally have more resources and infrastructure to support sustainable initiatives and are therefore more ready to take up the EU challenge of making the economy more circular. This emphasis on large companies has created a substantial knowledge gap in understanding the limitations SMEs face when implementing ESG frameworks. Despite their significant presence in the industry, SMEs face unique constraints that distinguish their ESG adoption path from that of larger companies. These constraints reveal the urgent need for tailored research that addresses the distinctive characteristics of SMEs operating in the tourism sector, particularly for activities where sustainability is an integral part of business operations. This study seeks to fill this gap by identifying and analyzing the main criteria influencing the choice to adopt ESG practices in small and medium hotels (SMHs). Using a quantitative methodology to analyse context data, the study aims to map the adoption of circular practices by Italian hospitality SMEs, and to assess the main drivers (and obstacles) influencing these practices by SMHs. Data will be collected through an exploratory survey to be administered online to more than 2000 Italian SMHs. The survey, carried out from December 2024 to January 2025, will focus on the main challenges faced by such firms, including but not limited to financial constraints, regulatory framework, and limited knowledge of the circular economy. Investigating prevailing and current challenges, this analysis contributes to a comprehensive view of the factors that hinder ESG integration and circularity in the tourism industry. By examining these issues within a specific regional context, this study provides relevant insights that can provide future guidance for policy makers, industry stakeholders and researchers. This research also contributes to the broader debate on sustainable tourism by highlighting the importance of actions designed to solve the unique needs and constraints of SMEs. Ultimately, it aims to foster a more inclusive approach to ESG in the hospitality industry by promoting practical and resource-sensitive solutions aligned with SMHs’ strategic goals.