The Missing Link in Guesthouse Sustainability: Institutional Factors Beyond the Triple Bottom Line

The rapid growth of the guesthouse sector has transformed the tourism landscape of the Maldives by promoting local entrepreneurship, broadening community participation, and diversifying tourism products beyond the traditional resort model. Despite its economic significance, sustaining guesthouse operations remains a pressing challenge due to increasing environmental vulnerability, socio-economic pressures, and institutional constraints. Although the Triple Bottom Line (TBL) framework has been extensively applied to examine tourism sustainability, existing studies have predominantly focused on the economic, social, and environmental dimensions, with limited attention given to the behavioural and institutional mechanisms that underpin sustainable organisational performance. Addressing this gap, this study extends the TBL framework by integrating Institutional Theory to investigate the direct effects of psychological, economic, social, and environmental factors on guesthouse sustainability and the mediating role of institutional factors in these relationships. A quantitative cross-sectional research design was adopted, and primary data were collected from registered guesthouse stakeholders across the Maldives using a structured questionnaire. The proposed conceptual model was analysed using Covariance-Based Structural Equation Modelling (CB-SEM). The findings reveal that psychological, economic, social, and environmental factors each exert significant positive effects on guesthouse sustainability. Moreover, institutional factors significantly enhance sustainability outcomes and partially mediate the relationships between the four sustainability dimensions and guesthouse sustainability, highlighting governance and institutional support as critical enablers of sustainable tourism development. By identifying institutional factors as the missing link in the sustainability framework, this study advances the theoretical application of the Triple Bottom Line and Institutional Theory within the context of small tourism enterprises. It also provides practical insights for policymakers and tourism practitioners by emphasising the need for integrated governance, effective regulatory frameworks, and collaborative stakeholder engagement to foster resilient and sustainable guesthouse development in Small Island Developing States.