RMIT international university vietnam ASSIGNMENT COVER PAGE key elements of triple bottom line (TBL) performance evaluations

RMIT International University Vietnam
ASSIGNMENT COVER PAGE

Course Code:

BUSM4567

Course Name:

Eco-Tourism & Sustainable Hospitality Management

Location where you study:

Saigon South

Title of Assignment:

Written Group Report

Student name & Student number:

Nguyen Yen Han (s3743951)
Tran Quynh Mai (s3712382)
Vuong Hue Man (s3741158)
Ha Huynh Phuong Thao (s3740778)
Luong Thuy Duong (s3740913)

Learning Facilitator in charge:

Nhan Nguyen

Assignment due date:

29 March 2019

Date of submission:

29 March 2019

Number of pages including this one:

19

Word Count:

3594
(excluding cover page, table of
content, references)

1


TABLE OF CONTENTS

Introduction

3

Key Elements of Stakeholder Theory

4

Key Elements of Triple Bottom Line (TBL) Performance Evaluations

6

Governance Interests and TBL

8

Service Provider Interests and TBL

9

Visitor Interests and TBL

10

Host Community Interests and TBL

11

Recommendations

12

Conclusion

13

Supporting Materials/References

14

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INTRODUCTION
‘Sustainable development’ has always been a positive trend that all industries desire to
follow. It is defined as ‘development that meets the needs of the present without
compromising the ability of future generations to meet their own needs’ (IISD n.d). In
tourism, to maintain and further enhance sustainable development, key concepts including
'stakeholder theory' and 'triple bottom line' must be prioritized and carried out appropriately.
These two elements will be analyzed especially in the case of Sapa. Sapa is a town located
to the west of Lao Cai Province, with the area of 24.02 sq. kilometers and the population of
around 15,000 people. According to Lao Cai Department of Culture, Sports and Tourism
(2017), every year Sapa attracts enormous numbers of visitors, which was up to 1.7 million
people and generated a total revenue of over 2000 billion VND in 2017. In 2018, the town
was placed at 6th among the top 10 destinations in Southeast Asia (VNAT 2018). However,
in recent years, Sapa has witnessed some adverse changes regarding two mentioned
concepts. In this report, research on the issues will be done from the perspectives of
different stakeholders, before some possible recommendations are drawn.
.

3


KEY ELEMENTS OF STAKEHOLDER THEORY
In the age of business competition, stakeholder theory should be understood well and
applied to each operation area as well as each activity type of that area. Sapa is one of the
places where the eco-tourism area is popular in Vietnam. Therefore, stakeholder theory for

the eco-tourism in Sapa should be applied appropriately to maintain and develop their
tourism industry. According to Freeman (1984), ‘stakeholder’ is defined as ‘any group or
individual who can affect or is affected by the achievement of the organization objectives’,
and ‘stakeholder theory states that the purpose of a business is to create value for
stakeholders not just shareholders’ (Donaldson & Preston 1995) . This concept has two
approaches:
The first one is related to the profit-making companies who are supposed to pay attention to
the needs and wants of all stakeholders not just the owners. However, the approach just
focuses on sectors that ‘deserved to be more concentrated on’ due to the differentiation in
the impacts of each stakeholder on the organization (Khazaei, Elliot & Joppe 2015).
The second idea states that all tourism activities inevitably affect a wide range of individuals
and groups, ‘each of whom has a legitimate interest in the process used to carry out that
activity, and the outcomes that result from it’ (Freeman 1984). Hence, organizations should
equally take care of anyone with interests in planning, delivery process or the outcomes of
those procedures (Khazaei, Elliot & Joppe 2015). ‘Every stakeholder is not necessary to
engage in the decision-making process but they all need recognizing and considered
because failure to analyze one stakeholder’s needs could lead to the error in the process of
planning and executing the service’ (Byrd 2007).
In business activities at Sapa, the relationship among stakeholders needs to be
differentiated so as to identify the exact stakeholders for every single project (Friedman
2006). Local communities, host area’s government and administrations, tourism service
providers, and customers (tourists) are the four main groups of stakeholders that can be
considered for tourism development in Sapa.
Firstly, ‘local community’ are the ones who support the tourism industry in their area to attract
tourists to come with services and specialties they provide. Specialties can be considered as
ethnic minorities such as Black H’Mong, Red Dzao, Dzay (VTN 2015). They have
maintained the cultural specialties throughout the long process and therefore, uphold their
own values and bring more benefits to Sapa.

4

Secondly, ‘tourism services providers’ offer the best services in all cases for tourists to enjoy
their time in Sapa. They come up with service plans and strategies to satisfy what customers
need and benefit themselves, yet still have to guarantee the common sense for all aspects.
Thirdly, ‘host area’s government and administrations’ play an essential role in the tourism
sector. They control and improve the economic, social and environmental dimensions of
Sapa’s tourism on behalf of the host area. In addition, they have to make sure that there are
no tourism activities that are conducted against the law.
Lastly, ‘tourists’ are a segment that bring biggest profit for the tourism development of every
destination. Sapa is not an exception. In 2018, the town ‘welcomed more than 2.1 million
visitors and earned more than 3.2 trillion VND (136.6 million USD) in tourism revenue’ (VIR
2018). Obviously, visitors’ interest has a significant impact on the quality of local tourism, as
they usually give feedbacks for their experience which may influence the decision of the
others. Taking Sapa as an example, positive feedbacks regarding events, facilities,
environment and attractiveness bring huge numbers of tourists and high annual income, but
negative ones may cause adverse results.

5


KEY ELEMENTS OF TRIPLE BOTTOM LINE (TBL) PERFORMANCE EVALUATIONS
The Triple Bottom Line is a concept that embodies three dimensions of a business, namely
profit (economic), people (social) and planet (environmental). It directly impacts on the goal
of business maintenance and development, and work as a basis for measuring the level of
corporate responsibility to the society and the impact on the environment (Adebowale 2002).
Economic sustainability, referring to business performance, is assessed through investment,
sales and profit taking. It supports economic growth, has the ability to solve cost problems
and manage risks in long term without adversely affecting the remaining aspects of society
and environment. Besides, economic sustainability can create social benefits, improve

economic stability, social status, and create jobs for local people. In other words, all
businesses can benefit from their operations, provided they comply with the law and can
manage long-term risks, to ensure revenue for the entire region and support local people's
life. To take Sapa as an example, if the government and investors cooperate and invest in
appropriate projects, then more jobs are created for the local, the total income goes up and
the life quality is improved. Also, this bridges the cultural exchange between ethnic groups in
the northern mountainous areas, connects commercial points of the Northwest with the
whole country, and further, the ASEAN region (TTXVN 2017).
Social sustainability is 'a process for creating successful sustainable development that
promotes wellbeing, by understanding what people need from places they live and work’. It
‘combines the design of the physical design with the social world - infrastructure to support
social and cultural life, social amenities, systems for citizen engagement, and space for
people and places to evolve’ (Lupinacci 2012). The government and investors have to be
responsible for supporting the life quality in the area, and ensure that when service providers
enter the area, the local will not be negatively affected and their traditional identity must be
respected. Particularly, Sapa is one of the places where indigenous culture are ‘golden
resources’ and therefore have created a foundation for Sapa to develop various types of
tourism, especially cultural tours and community tours. This can be considered a solution to
poverty and unemployment of the local (Tho 2018). No matter what, all activities must follow
the law to form a secure environment for each stakeholder.
Environmental sustainability is a term that assesses the legally responsible interaction with
the environment to prevent exhausting natural resources, at the same time ensure the rate
of exploitation of renewable resources and valuable resources for humans with long-term
relevance. Environmental sustainability helps to assure that the needs of human civilization
are met and that future generations can fulfill their needs without being hampered by
6


environmental sustainability (Moldan, Janouskova & Hak 2012). Not only tourism, but also
other industries all have significant impacts on the environment. Therefore, each individual

and business needs to hold responsible for their activities, which may do harm to natural
resources. Besides, the growth of tourism development is remarkable nowadays, so all
stakeholders need to comply with laws on environmental protection to ensure environmental
sustainability, in order to attract more investments, increase the industry revenue and
strengthen the local economic situation. In Sapa, the exploitation of natural resources, the
lack of waste treatment plans and the lack of public awareness regarding environmental
protection are significantly affecting people’s daily life, and also worsening the image of the
destination (Hop 2018).

7


GOVERNANCE INTERESTS AND TBL
In the economic aspect, the governance consented to a long-term plan including the need
for Sapa to improve its unique point as well as the service quality. The local government
pays attention not only to the economic restructuring regarding workforce and the quality and
quantity of service industry, but also to the rural economy development (VIR 2016 & Viet
Nam News 2017). The Ministry of Transport has also allowed connecting Hanoi - Lao Cai
Expressway to Sapa and constructed Lao Cai Airport with the capacity of 560,000
passengers to facilitate the travel route (Huyen 2016). However, despite the government’s
big efforts, Lao Cai still faced many challenges in terms of economy. Particularly, the system
of cargo yards at the border gates is narrow; the progress of some important transport
projects is reportedly slow. Additionally, the infrastructure and human resource quality of the
tourism industry are still weak and not sufficiently invested (The World & Vietnam Report
2017).
Speaking of the social aspect, in recent years, Sapa has become a preferable destination for
many domestic and international tourists thanks to a wide range of ethnic minorities who
share distinct native cultures. Therefore, along with the economic development, the
government also launched plans for social development. President Tran Dai Quang said that
Sapa government should focus on developing human resources, healthcare system and

education system for ethnic minorities. It is also important that ethnic cultures be well
preserved and promoted (Viet Nam News 2017). Nonetheless, the local intellectual level is
still low despite the attempt in improving local education.
From the environmental perspective, Sapa District Commissioner has approved and
implemented Project No.09 ‘Environmental protection, responding to climate change in the
period of 2016 - 2020’ to solve the situation of environmental pollution. The project highlights
the need of improving urban environment and promoting the development of local tourism
industry (Duc 2016). Nonetheless, huge hydropower projects built at Lao Chai, Su Pan,
Muong Hoa valley... have done harm to the local environment. To take an example, Lao Chai
and Su Pan were some of the most well-known tourist attractions in Sapa, but there was a
remarkable decrease in the number of visitors coming after the construction of hydropower
dams. Natural landscapes are ruined; the excessive level of smoke, dust and the sound of
rocks blasted have negatively affected not only tourists but also local residents. Other issues
may also be occured, since local farming lands were occupied and water was depleted for
the hydropower building process.

8


SERVICE PROVIDER INTERESTS AND TBL
From the economic side, few years ago, Sapa had 126 businesses which could only supply
around 3,600 beds for tourists, according to Lao Cai Provincial Tourism Information Center,
(VNS 2015). Obviously, Sapa cannot serve its visitors well with high-quality rooms due to the
lack of accommodation, thus, investors were encouraged to come. Sun Group was one of
the first investors who saw the tourism potential of Sapa, and invested about VND 4,400
billion in the construction of the world's most modern three-wire cable car which was first
available in Asia - Fansipan Sapa (Quy 2016). Sun Group’s activities also drove investments
from other investors to Sapa, such as Vin Group, Hoa Sen, Bitexco Group… In addition, the
five-star hotel project started in 2015 by Constrexim Holdings was another big investment,
which covered 7,000 sq. meters. Since then, other 30 investment projects were being

involved, which led to the significant rise in the number of accomodation in Sapa.
Particularly, the number of rooms went up from 2,500 in 2010 to 4,000 in 2015. However,
doubtlessly when the local economy grows and is fully concentrated, the impacts on
environment tend to be ignored. Notably, the cable car system which is used to deliver
visitors to the summit of Fansipan can be a cause to destroying Sapa’s nature. Many ethnic
people claimed: ‘If more and more building (happens), then one day we will lose Sapa, we
won't have any more mountain’ (Christoff 2016).
About the social aspect, as Sapa is home to various ethnic minorities like Hmong, Dzao and
Tay, traditional cultural activities in Sapa are abundant and diverse. Festivals such as Gau
Tau, Nhan Song, Tet Nhay... with a wide range of activities are organized every year, which
was one of the most appealing factors of Sapa (Do 2015). Tourist companies, therefore, are
to plan more tours at the same time as the festivals are held so as to attract more
customers, to gain more sales and revenue. This can not only raise awareness for tourists
about the regional culture, but also be used as an economic advertising tool for the
destination.
Speaking of the environment, Sapa has been for long well-known for its breathtaking natural
sights such as Love Waterfall, Silver Falls, Sapa Lake and Muong Hoa Valley. However,
while just focusing on investing in business projects, investors may not be aware that the
natural environment and ethnic culture of Sapa are under threat due to tourism
commercialization (Ha 2017). The forest and many trees are cut and destroyed to build the
hotels, restaurants and stores. Besides that, big and small constructions being built or
maintained in Sapa tend to damage its traditional peaceful atmosphere in tourists’ eyes due
to dust and noises (Quynh, Tung & Tien 2017).

9


VISITOR INTERESTS AND TBL
Coming to Sapa, tourists are now having many choices of stay that meet their needs and
financial conditions, with various price types such as 15-20 USD for hotels outside the town,

or over 100 USD for luxurious accommodations. This is a positive point in terms of tourism
services offered by Sapa, since service has never been considered a strength of Sapa’s
tourism. However, the lack of investment in road repair is a huge problem for Sapa. Frequent
roadworks and bad road conditions prove that the main roads at Sapa are not well
maintained. This causes dust on dry days, slippery rocks and muddy hill slides on rainy days
which are dangerous for travelers’ movement as the terrain of Sapa is mountainous
(Hodophile, 2018).
For the social area, there are chances for tourists to explore local customs and habits, for
example, the traditional cuisine of ethnic minorities such as H’Mong, Dao, Tay, Giay, Hoa,
and Xa Pho. In particular, tourists can try tasting different specialities like 'thang co', 'cap
nach' pork, seven-color sticky rice… which they probably cannot be served in central cities.
In addition, according to Asku (2015), as the local regularly deal with many international
visitors, English can be considered a common language in this area, meaning that travelers
do not face many difficulties in communicating with local residents in Sapa. Nonetheless,
‘tourism in Sapa marred by bad sales tactics’ proves that the image of hospitable local
people are gradually disappearing. Instead, there are new phrases such as ‘no money, no
photo’ or ‘no money, no talk’, and children claiming money for photos that tourists have taken
or forcing them to buy souvenirs (Lao Dong 2012 & Vu 2017). It is noticeable that many local
residents aim to take advantage of tourism, when they become street vendors and use
children as a tool to earn money from tourists. These manners infuriate tourists, and also
worsen the national image in the eyes of foreign friends.
On the environmental side, cool fresh atmosphere is a unique feature of Sapa compared to
other tourist cities. Sapa is also favored by the imposing scenery as well as wild village trails,
which allows tourists to experience the simple beauty of nature thanks to pleasant natural
conditions. However, in recent years, due to the continuous economic development, many
forest trees have been chopped down to give way for modern buildings and resorts. As a
result, Sapa is gradually losing its true beauty, which is the primary cause of tourists’
dissatisfaction when returning to the town (Amy, 2017).

10

HOST COMMUNITY INTERESTS AND TBL
H'Mong and Dzao are the two ethnic minorities that occupy the population majority in Sapa.
There are several other ethnic groups and also people migrating from the delta who live and
develop their business there.
The strong tourism development has brought more benefits for the economy such as
creating more career opportunities, contributing to local income, and improving the quality of
life for villages. Since the number of tourists has remarkably increased in recent years,
ethnic minorities have launched the homestay model in order to offer more practical
experience to tourists, such as cultural life and daily routine of a native. This activity attracts
a wide range of tourists, helps to generate higher revenue and reduce the number of poor
households in the locality (Nhan Dan 2017). On the other hand, although Sapa is famous for
its unique terraced fields, due to the excessive exploitation, the local gradually neglect the
agricultural development which was the main industry of the locality. Specifically, the ethnic
groups tend to follow the trend of using what they make, not purchasing from the outside,
thus, if they made too much exploitation, farmlands might be exhausted which led to the
drop in agricultural productivity, hence insufficient food (Aurik 2017).
In the social aspect, tourism development is synonymous with local cultural features that are
introduced, developed and preserved. For instance, Lao Cai Department of Culture, Sports
and Tourism and Sapa district’s authorities proposed the plan named ‘turn heritage into
assets’, which means preserving and promoting unique products of each local community
such as Gau Tao festival, Khen (a type of wind instrument) dancing festival, fan dance, Cap
Sac (coming-of-age) ritual… (Nhan Dan 2017). Though tourism development provides a
better outlook for the society, it makes Sapa gradually be urbanized and loses some
traditional cultural values due to the modification to satisfy tourists’ tastes.
Lastly, there will be more investments from the local communities in the environmental
preservation, with a view to reducing pollution and improving the landscape nature to appeal
to more tourists. In addition to applying certain protection measures such as waste
management or public hygiene education, maintaining the sustainable development of

tourism in Sapa is also considered essential. Nevertheless, many environmental issues have
to be overcome by the host community, for example, livestock management and waste
disposal, according to Bao Moi (2018). Landfills cause unpleasant odors to the air, and even
dangerous respiratory diseases for people. Meanwhile, cattle let wander may lead to not
only traffic obstruction, but also the lack of hygiene due to their unwiped droppings.

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RECOMMENDATIONS
According to VOV (2019), Lao Cai government has set a target for Sapa - to receive 5
million tourists in 2019 and turn itself into a prominent tourist destination in Vietnam.
However, in fact, stakeholders of Sapa did not fully consider long-term consequences in
terms of sustainable development. To improve the current situation of Sapa and further
enhance the tourism potential in the future, several measures should be issued.
On the economic side, it is recommendable that the local communities keep developing
community-based tourism, which include homestay services, in order to reduce poverty and
overcrowding in urban areas. This can also help to improve sustainable tourism, protect the
traditional cultural identity and ecological environment of Sapa (NDO 2014).
On the social side, to avoid street vendors, it is important that a plan be launched for
expanding the area of boutiques at local attractions, and offering fixed prices to control
trading activities at Sapa. Besides, some education programs are needed to raise
awareness for the local about the consequences of trying to sell for tourists with insistence,
since this affects not only the image of Sapa tourism, but also the residents’ own income as
part of the local economy. The development of barn systems is also needed to aim for freecattle traffic. Furthermore, all cultural values had better be well preserved and promoted by
proper strategies to attract more visitors in the future.
There are several practical measures to tackle the environmental issues at Sapa. Firstly,

electric buses can be used instead of normal fueled vans in order to reduce air pollution. As
these buses travel around the attractions to pick up and drop off tourists, they can also work
as a propaganda instrument for ‘green tourism’ or ‘responsible tourism’. Secondly, the local
governance should focus on raising awareness regarding natural resource protection and
tourism waste treatment for every stakeholder to minimize misbehaviours. Lastly, to protect
the fresh atmosphere at national destinations in general, and Sapa in particular, local
infrastructure and facilities like trash bins, public toilets or roadways need to be improved, in
order to guarantee the convenience and safety for both visitors and host communities.

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CONCLUSION
In conclusion, it is the investment and development of tourism that has strongly impacted
Sapa on the landscape as well as the residential life, thus, open up many opportunities and
bring challenges to every stakeholder.
Therefore, it is essential to comprehend and make use of each key concept, which are
‘stakeholder theory’ and ‘triple bottom lines’ in this case of Sapa, then apply them to the
sustainable tourism development. Although Sapa still faces various problems in adapting
sustainable tourism, the potential for the development of local tourism industry is still high.
Each stakeholder can raise their own awareness to overwatch their attitudes towards the
economy, society and environment of the destination. This requires a high level of
endeavour and contribution from everyone as well as the capability to support each
stakeholder.

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