Green Hotels

The Green Supply Chain: Fad or Sound Business Practice?
(The Hospitality Industry Specifics)

Shelagh Kelley

BUA 542 MB18 – Operations & Logistics Management

Carl Kooyoomjian

April 16, 2013

During the early 1990’s there was an increasing concern for the environment. Consumers began looking at companies that were known for hurting the environment and at that time, only those companies were targeted. Today, more consumers have been educated on the relationship between consumption and global warming. As a result, consumers now understand the adverse impact on the environment both directly and in-directly. Thus more industries, including the hospitality industry, are being affected and urged by consumers to change their habits. Consumers are demanding more eco-friendly products in their grocery stores, in the cars they drive, and even at the hotels they stay at on vacation. It has become clear through recent studies that consumers want more for their money and ‘more’ means eco-friendly. My focus for this paper is on the hospitality industry and how they are changing to become more eco-friendly for their consumers, because it is an area that interests me. Eco-Friendly is defined as something that is not going to be harmful to the environment. Although the hospitality industry is not one of the industries that is a direct threat to the environment, it does however, have a large number of operations within its sectors, which do affect the environment. What is even more interesting is that the hotel sector within the hospitality industry is “one of the most energy and water intensive sectors.” (Kim & Han, 2010, p.998). Each hotel consumes “small amounts of energy, waste, water, food, and other resources which adds only a small amount of pollution to the environment in terms of smoke, smell, noise, and chemical pollutants.” (Kirk, n.d) Although each hotel’s consumption is insignificant, when you look at the industry as a whole, it becomes more important due to its’ profound impact on the environment. Therefore, changes needed to be implemented in the hospitality industry. A drive to end detrimental impacts on the environment from the hotel sector was necessary to keep the business of the consumer. “Going green” is one of the ways in which the hotel sector will maintain and grow the business of its consumers. The term, “going green” elicits different sentiments among different consumers. A large amount of consumers are in on the hype and would like to help yet they don't want to pay the price. In a study done by Coddington, it was found that in the early 1990’s many consumers had changed their minds and were becoming more environmentally friendly. In the same study, Coddington found that consumers were willing to pay a slight increase of 5-10% for eco-friendly products (1990). However, since then the economy has changed and individuals have become more conscious of their money and how they spend it. A study done in 1995 in the United Kingdom, found that although the number of green consumers had increased by a small number, the number of consumers willing to purchase “everyday” green products had declined (As cited by Lee, Hsu, Han & Kim, 2010, p. 902). Any hotel can say it’s environmentally friendly, however, the real eco-friendly hotels are usually LEED (United States’ Green Building Council’s Leadership in Energy and Environmental Design) Certified (Butler, 2008). The LEED Certification is similar to an AAA rating in any hotel. It defines the best of the best in eco-friendly hotels. LEED certified has set criteria for picking hotels on their lists including “a building [that] is environmentally responsible, profitable and equipped with energy-efficient measures (Butler, 2008).” It’s not just reusing the towels, it’s the idea of adding more eco-friendly products not only in the front of the house but in the back of the house by including things such as “an elevator that regenerates energy through its braking system…(Wiegler, 2008, p.18)” It’s a lot more work and a lot more expensive, but for Greenhouse 26, a hotel in Manhattan, it could mean a LEED Certification. Furthermore, AAA has learned that eco-friendly is a big part of the travel industry now, and has also worked an environmentally friendly section into their AAA rating system. Although some hotels may never “go green,” the tourism industry is looking out for those consumers who want to be environmentally conscious. LEED certification is only one type of rating. The rating that really matters to hotels is that of their guests. In 2007, JD Power and Associates found that 75% of guests in hotels wouldn’t mind helping with environmentally friendly initiatives. (as cited by Lee, Hsu, Han & Kim, 2010, p. 902) The study also showed that more people were willing to include themselves in the fight against global warming. Although it’s not possible to look into each and every eco-friendly and non-eco-friendly hotel one by and one to see who is doing better with customers, the following are key factors which would determine their success rate : “(1) intention to revisit, (2) intention to offer positive recommendations and (3) willingness to pay a premium (Lee, Hsu, Han & Kim, 2010).” The first two sections help others to understand the difference between an eco-friendly hotel and a hotel that is not eco-friendly. The study was done via an online survey sent to about 3000 people in-which 416 responses were taken into consideration. According to the results of Lee, Hsu, Han, & Kim (2010) the general public’s acceptance of the concept of global warming is fostering their attraction to eco-friendly hotels. The guests are getting their opinions out there that they want eco-friendly hotels. The hotels are listening, and in response chains are now promoting things like Hilton’s “97% eco-friendly rooms made from recycled materials (Lee, Hsu, Han & Kim, 2010, p.910).” Research is proving hotels are taking part in this growing eco-friendly trend. When it comes to a customer’s satisfaction, satisfaction is maintained through amenities. Although most amenities are the same in an eco-friendly hotel, as in non-eco-friendly hotels, the difference comes into play in how they differ through cleanliness and quality. In the same study done in 2009 by Lee, Hsu, Han, & Kim, two surveys were taken based on the Likert-scale (1 being negative and 7 being very positive). They studied the value and quality of a green hotel. The survey included all aspects of the hotel and learned about the customer’s satisfactions with green hotels. The second survey went more in depth with customer satisfaction and their satisfaction with the hotel amenities, image, and price. The results showed guests increased appreciation towards “green” hotels. This study also brought forth questions about the “willingness to pay a premium”. (Lee, Hsu, Han, & Kim, 2010, p. 909) It made sense to look into which hotel was making more money and saving more money. When Iwanowski and Rushmore looked into eco-friendly hotels, they found that becoming an eco friendly hotel “makes good business sense in that you’ll ultimately increase profits and be seen as a good neighbor and corporate citizen”. (Iwanowski & Rushmore, 1994, p. 35) It means going green not only saves you money by reducing waste and saving energy, but also brings in more guests, increasing the profit of the hotel. In an article by Butler he took it a step further breaking it down by percents and dollars. It is important to take into consideration when looking at Butler’s research that his is based on LEED certified hotels. Butler (2008, p. 240) found, “Every 10 percent reduction in energy consumption equates to a hotel raising its average daily rate by $1.35 for full service properties and $0.60 for limited service properties. Using the USGBC’s figures with a 30 to 50 percent energy savings, a limited service hotel would achieve hard economic savings that would be the equivalent of increasing average daily rate (ADR) by $1.80 to $3.00, and a full-service hotel would have the equivalent benefit of increasing ADR by $4.00 to $6.75.
This research showed how much a green hotel could advance past a non-green hotel. It is a large increase in savings and in profit. It’s beneficial to be green, however, Butler (2008) also found it was cheaper to build green from scratch than it was to retrofit a building. Although consumers are willing to pay the premium, some hotels don’t have the money to become eco-friendly. Butler touches upon a few tips for hotel owners that would make them more eco-friendly without retrofitting and spending a large-lump-sum. Hotels could start with the reusing of towels, just as Goldstein, Cialdini and Griskevicius had suggested in their study. Hotels could go a step further by installing a low-water-flow shower system (Butler, 2008). This would save hotels the cost of installing new pipes and improve the eco-friendly status. Butler states that although it can be pricey to start and is a time consuming effort, he notes it’s all worth it in the end when consumers are happy and the hotel is saving money. Hotels are changing and taking into consideration what their consumers want and what they can afford to do, while making a profit. In a study done by Enz and Siguaw (1999) they found four hotels selected as “champions” of the “environmental best-practice” award done by the Cornell University School of Hotel Administration. The research shows a combination of each study that has already been touched upon. These four hotels were already established and turned their hotels eco-friendly throughout the years. They also involved their guests through recycling programs they implemented, and are overall very successful hotels, both financially and through consumer population. The four hotels consist of The Colony Hotel in Kennebunkport, Maine, Hotel Bel Air, in Bel Air, California, the Hyatt Regency in Chicago, Illinois, and the Hyatt Regency in Scottsdale, Arizona. These four hotels have been measured through success and have had the biggest measurable success. Managers and hotel owners need to take into consideration that although they could save money from “going green” to get to that green step they must spend a lot more than they have. It’s been advised to build new to keep up with the growing trend. Throughout the paper, it has stated that going green is great for the environment and it’s good for hotel owners and managers, as long as they really look into the facts and studies. Overall becoming a green hotel isn’t just hype, it’s worth it. It’s a trend that looks as if it’s going to be around for a while based on the number of groups getting together and looking into becoming environmentally friendly (F.L.C, 2000).
Reference
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C, F. L. (2000, October). Hoteliers and corporate travel buyers to promote "green” hotels together. Cornell Hospitality Quarterly, 41(5), 16. doi:10.1177/001088040004100526

Enz, C. A., & Siguaw, J. A. (1999, October). Best Hotel Environmental Practices. Cornell Hotel and Restaurant Administration Quarterly, 40(5), 72 - 77. doi:10.1177/001088049904000511

Goldstein, n., cialdini, r., & Griskevicius, v. (2008). A Room with a viewpoint: using social norms to motivate environmental conservation in hotels. Journal of Consumer Research, 35(3), 472-482. Retrieved from Hospitality & Tourism Complete database.

Iwanowski, K., & Rushmore, C. (1994). Introducing the eco-friendly hotel. Cornell Hotel & Restaurant Administration Quarterly, 35(1), 34. Retrieved September 24, 2010 from Hospitality & Tourism Complete database.

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