The impact of financial performance on key environmental performance of hotels in Serbia with environmentally sustainable practices

This study examines 47 hotels in Serbia that implement environmentally sustainable practices and are listed on the Etic Hotels platform. The analysis draws on data for key environmental performance indicators (carbon footprint and Etic Green Score) sourced from the Etic Hotels website and the hotels' official websites, as well as financial statement data for 2023 obtained from the Serbian Business Registers Agency (APR). The research has two primary objectives: (a) to assess whether Serbian hotels listed on the Etic Hotels platform exhibit relatively stronger or weaker environmental performance, and (b) to evaluate the influence of operational efficiency indicators-specifically profitability and cost-efficiency on key environmental performance measures, including carbon footprint and the Etic Green Score. The stated objectives were addressed using (a) cluster analysis, which enabled the classification of hotels in Serbia into two groups "green" (more environmentally sustainable) and "red" (less environmentally sustainable) and (b) multiple linear regression to investigate the relationships between financial performance and environmental performance indicators. All statistical analyses were conducted using the STATA/SE 13 software package. The results of the analysis revealed the following: (a) "green" hotels dominate the Etic Hotels database (39 out of the 47 observed hotels). These hotels are characterized by a carbon footprint below the sample average (≈14.14 kgCO2e) and an above-average Etic Green Score (≈6.19/10). In contrast, eight hotels fall into the "red" cluster, exhibiting below-average environmental performance. (b) There is no statistically significant effect of financial performance, specifically profitability (ROA and ROE) and cost-efficiency (total cost-efficiency (TCE) and operating cost-efficiency (OPE)) on carbon footprint. However, ROE and OPE show a positive and statistically significant effect on the Etic Green Score, whereas TCE has a negative and statistically significant effect. ROA, however, does not have a statistically significant effect on the Etic Green Score. The findings for 2023 indicate that among the 47 hotels in Serbia, there is an awareness of the importance of environmental performance and a willingness to report on it. However, this practice remains underdeveloped, as it is not yet widespread among all hotels in Serbia, 441 of which are listed on the website of the Ministry of Tourism and Youth. It is expected that the introduction of mandatory sustainability reporting regulations, aligned with green transition trends, by 2030 will support the full establishment of environmental and broader sustainability reporting practices within the Serbian hotel industry. This development would represent an initial step toward implementing new models of circular and regenerative sustainable business practices in the Serbian hotel sector.