‘Green’ deeply engrained in hotel industry
21 APRIL 2014 11:40 AM
Sustainability has not yet achieved ubiquity, but green initiatives and business practices are now commonplace throughout much of the hotel industry.
GLOBAL REPORT—When MGM Resort International’s CityCenter was a burgeoning shell on the Las Vegas Strip, Cindy Ortega approached her boss with concerns about the ambitious goal of attaining LEED certification for the 16.9-million-square-foot, mixed-use complex.
She was a CFO of corporate services then, and her boss, CityCenter President and CEO Bobby Baldwin, admitted some of his own concerns before reiterating the company’s mission to emphasize energy conservation and sustainable development and operations.
The project would achieve the U.S. Green Building Council’s Leadership in Energy and Environmental Design certification, he said, and Ortega would be the one to lead the charge.
First up on her agenda? “Let me go and find out what that means,” she said.
“I came back and said to him … ‘We have to change the trajectory about how we’re using the resources of the world or we’re going to run out of them. And the best news is this has a positive business case. … It will provide benefits not to just the environment but to the bottom line.’”
Seven years later, CityCenter has achieved six distinct LEED Gold certifications, and Ortega now serves as MGM’s senior VP of the corporate sustainability division.
“Green went from being a novelty that hoteliers liked to talk about … to it becoming an expectation of the major clientele,” Ortega said.
During 2000, only one hotel achieved any level of LEED certification; 42 hotels did so in 2013, according to a listing of public projects from the USGBC. (Additional hotels have achieved LEED certification but opted not to publicly disclose their information.)
Countless other properties have sought certification from other sustainability schemes. Others still have made strides without seeking any formal recognition.
“Is everybody doing it? Not everybody’s doing it, but most are, and most people know it’s the right thing to do,” said Stephen Galbreath, VP in architecture firm RTKL’s hospitality division.
Low-hanging fruit picked dry
Driving the hotel industry’s adoption of sustainable business practices is the broadening of the knowledge base. Whereas “green” best practices were once limited to environmentalists, those learnings have since trickled down to saturate much of the broader market, sources agreed.
“It’s getting easier and easier with things like LED lighting that use so little wattage per candle and air conditioning units just becoming more and more efficient and on-demand water that doesn’t keep 50 gallons of water hot at all times,” Galbreath said.
RTKL’s hospitality division aims for LEED certification on every project, he said, and most investors are happy to oblige—especially once they realize the building components require little or no additional investment and save money in the long run.
Operating sustainably is easier to achieve now, too, said Denise Naguib, VP of sustainability and supplier diversity for Marriott International.
“Our consumers are expecting more of us,” particularly in the supply chain, she said.
That applies not only to sourcing cleaning supplies and textiles, but also food-and-beverage outlets, Naguib explained. As consumers become savvier about what they put into their bodies, they’re expecting more transparency around hotels’ procurement of locally sourced and healthy ingredients.
Many hoteliers have stepped up to the challenge, checking off the basic items on the green to-do check list, said Patricia Griffin, head of the Green Hotels Association, which counts approximately 200 member hotels.
“The low-hanging fruit is pretty much yanked,” she said.
That customers’ sustainability savvy is growing along with the hotel industry’s is no coincidence, Naguib said. Corporate social responsibility might influence strategy in many corporations, but so does the bottom line. What the market wants, the market gets.
Executives at TripAdvisor understands guests’ demands as well as anyone, drawing insights from more than 150 million reviews. Asked if green operations have emerged as a recurring theme therein, Jenny Rushmore, the company’s director of responsible travel, said “definitely.”
More than 80% of guests expect hotels to have green practices, according to TripAdvisor’s proprietary research. But 73% are not sure what to look for, Rushmore said.
That’s why the online review platform launched its GreenLeaders program a year ago. To qualify, hoteliers must answer 50 questions about their properties and subject themselves to a third-party audit to verify key information. Those that pass receive a special icon on their TripAdvisor listing, for which eco-conscious guests can search.
“Most people have multiple criteria in mind when they’re trying to book a trip,” Rushmore said. Price and location might top that list, but sustainability is becoming more important every day.
That’s not to say guests are any more likely to pay extra for it, Marriott’s Naguib said.
“We hear a lot that sustainability is important to the traveler … and their expectation is that we do all of these things,” she said. “However, there is zero tolerance for additional cost or any inconvenience for doing something.”
Rohit Verma has reached a similar conclusion after conducting research on guest behavior and hotel performance as they relate to sustainable hotel practices. However, that’s not to say hoteliers don’t realize significant benefits in other ways.
In one study, the Cornell University School of Hotel Administration professor found that hotels with various levels of sustainable certification are more resource-efficient and reap savings on the bottom line. In another, he found sustainable hotels have happier guests.
“When you put it all together, it’s saying that environmental certification and being more sustainable by extension, you have better resource utilization; your customers will be happier; and your balance sheets will be healthier,” Verma said. “But if you’re looking for increases in (average daily rate), that’s not going to happen.”
TripAdvisor’s Rushmore noted other benefits.
For the platform’s GreenLeader hotels, travelers are prompted to comment specifically on the property’s sustainable practices. More than 20,000 guests have done so. Subsequent analysis of that cohort has painted its members as not only more travel-savvy but also more valuable, Rushmore said.
“We’ve found that people who write green reviews … on average they engage more in TripAdvisor; they write more reviews; and they spend more money on travel,” she said.
Benefits aside, hoteliers are also aware of the opportunity cost of not being green. From meeting planners to corporate account representatives, major clientele are now demanding sustainable business practices.
“If you don’t have (them), it’s a mess now,” Ortega said.
A long way to go
Though it now threads its way throughout most areas of the hotel industry, sustainability has not yet achieved ubiquity, sources said.
“We are not at the tipping point yet, but there has been significant improvement in the past three years,” Verma said.
The road to green is a path that never ends, Griffin said.
“We are always going to have some more things to do and more ideas. … We continue to get some really interesting vendor products and services. That’s where it’s the strongest at this point.
“The biggest change will come when the public understands, if they ever do, the very close connection with good health and environmentalism, whether that’s eating organic food or having a cleaner restaurant or whatever it is,” she said.
Hurdles include procurement, securing stakeholder buy in, adapting to new technologies and reporting.
The latter has seen significant progress, Naguib said. A year-and-a-half ago, Marriott had to go property by property to attain sustainability metrics from its 4,000-plus hotels.
“I used to receive (requests for proposals) with lists of 100 hotels asking, ‘Does this hotel recycle?’ … To which I replied, ‘I don’t know. That’s a really good question!’” she said. “That was not a good approach. Our sales team was going all over the place to find answers. As you can imagine, you don’t want to go to the hotel with every RFP to ask them every single question.”
Now much of that reporting and data collection is automated, making it easier for Marriott to analyze the impact its portfolio has on various measurements. The company also has started reporting key information for the increasingly interested investment community, Naguib said.
“It’s a direct connection between the sustainability efforts that we are doing to the investment community and the value of our company,” she said.
Other companies are following suit in an effort to promote transparency and communicate their efforts to the traveling public.
“Green claims were often considered marketing claims. …” Ortega said. “Now hotels are having to be much more elaborate in the way they develop and implement a green policy.”