Sustainability in the Hospitality Industry
In the highly fragmented hospitality industry, operational efficiency and effective marketing are key to generating profits. Analysis based on the Viridis Environmental Scorecard indicates that the sustainability performance of the hospitality industry trails that of many others. But hotel operators, particularly those with extensive real estate portfolios, have significant opportunities to reduce costs and boost profitability by embracing sustainability measures.
Sustainability Drivers
Historically, major hotel operators have focused less on comprehensive company-wide environmental programs than companies in more regulated industries, such as energy or chemicals. Despite its impact on land use and development, transportation, and other extended impacts up and down the value chain, hospitality has faced little regulatory exposure and stakeholder attention. However, fluctuating prices for energy, water, and waste disposal, and government tax credits for renewable energy and energy efficiency investments have made sustainability-related investments more attractive. Furthermore, increasing consumer interest is also prompting operators to launch sustainability programs. For example, major meeting planners now require hotel operators to provide detailed environmental information in their Request for Proposals. Leading hospitality companies are beginning to go beyond facility-by-facility initiatives (for example, inviting guests to opt out of daily linen service) and are incorporating sustainability into their business strategy.
Challenges and Opportunities
Hospitality companies have much to do to meet future sustainability challenges. They can begin by asking:
- After we have pursued the easy gains, how do we find eco-efficiency opportunities that provide benefits to our business and stakeholders?
- How can we engage our guests more effectively on sustainability?
- How can we leverage our sustainability efforts to drive revenue and enhance the value of our brand?
Viridis has worked with hospitality companies on these and other related issues.
Case Study
In a four-month initial engagement, Viridis developed the foundations of the sustainability strategy for a multi-billion dollar international hospitality company that operates an international network of independently-run properties. We followed with a series of projects to effectively implement and extend the program. A central, client-imposed challenge has been to implement a sustainability program that both reduces costs and supports the highest-quality product, including the latest in technology-supported leisure and entertainment. The company is highly attuned to the perceptions of its customers, employees, and communities.
Working closely with the client, Viridis developed a three-stage strategy that addresses the company’s fundamental environmental impacts and creatively positions the company as an environmental leader in the hospitality industry. The strategy includes cost-cutting eco-efficiency initiatives focused on water use, waste reduction, and energy use and carbon reduction. The strategy also covers employee and customer engagement programs and a public communications plan. The program has achieved significant efficiencies and earned the company a series of environmental awards. Building on the initial efficiency improvement successes, the program is now moving on to customer-facing sustainability initiatives to enhance the brand and enable sales to environmentally-aware clientele.