From Rooms to Returns: The Strategic Role of Sustainability Reporting in the Hotel Industry

Abstract

Background: Hotels in Indonesia are adopting sustainable practices in response to growing demand for eco-friendly hospitality. However, empirical evidence remains limited on how profitability and sustainability reporting affect business value in the hospitality sector. Objective: To identify the impact of (1) company size contribution and the audit committee roles on the disclosure of the sustainability report, and (2) sustainability report disclosure and profitability on firm value. Method: This quantitative study uses secondary data from publicly listed hotel companies in Indonesia for 2021–2023. Partial Least Squares–Structural Equation Modeling (PLS-SEM) was used to analyze the relationships. Results: Our research findings indicate that sustainability report disclosure is positively affected by audit committees, while there is no significant effect of firm size. Furthermore, the disclosure of sustainability reports and profitability positively influences a firm's value. Conclusion: Sustainability report disclosure is equally important as financial performance in increasing company value in the hospitality industry.   Keywords: audit committee; firm value; hospitality industry; profitability; sustainability reporting