Green Trends: Considerations for Leading Hospitality Companies
 
April 2, 2007
 
Robert M. "Bob" Chasnow- Washington

Major corporations like DuPont, Caterpillar, and BP are lobbying President Bush to develop mandatory carbon emission caps. Walmart CEO Lee Scott made a bold pledge to use 100 percent renewable energy and produce zero waste. As Thomas Friedman, a New York Times editorialist, states, “Green is ... the [growth] industry of the 21st century.”

Should hotel and resort companies invest time and resources toward joining the growing green movement? Does the green/sustainability movement relate to the hotel and resort development business?

Sustainability Makes Business Sense

With environmental compliance now a global issue, many companies possess environmental management systems, some developed around international compliance standards (e.g., the International Standards Organization’s (ISO) 14001 standards). These formal environmental management systems can yield significant benefits, including environmental compliance, which can reduce legal costs and liabilities.

Environmental management programs that move beyond compliance efforts can yield significant benefit to a company’s bottom-line by increasing focus on cutting current costs through reducing inputs and waste. For example, Walmart saved $3.5 million in transportation costs in 2005 simply by eliminating excess packaging on the company’s Kid Connection toy line.

Buildings Are the Hotel Industry’s Greatest Source of Impact

The source of the hospitality industry’s largest impact on the natural environment is obvious – it’s the buildings that house hotels and resorts. The materials and processes used to construct and renovate these buildings have two main impacts:

1) hotels and resorts are often located in environmentally sensitive coastal and ecologically abundant regions

2) the building materials and construction methods typically used significantly impact the environment

According to the U.S. Green Building Council (USGBC), buildings in the United States use a significant amount of the country’s energy and raw materials including:

• 36 percent of total energy use/65 percent of electricity consumption

• 30 percent of greenhouse gas emissions

• 30 percent of raw materials use

• 30 percent of waste output/136 million tons annually

• 12 percent of potable water consumption

Construction methods have a great impact on the environment, but breakthroughs in building science, technology and operations are available to build green and maximize both economic and environmental performance.

Besides buildings, resort amenities such as golf courses are also becoming more environmentally friendly. On March 6, 2007, Sports Illustrated magazine ran a global warming article that featured an insert on the Cooks Creek Golf Club in Ashville, Ohio, an environmentally sustainable golf course with an Audubon sanctuary and a blue-heron rookery. The course also applies nonchemical pesticides where possible, uses partially-treated water in its irrigation systems to conserve potable water, and features golf carts powered by alternative energy sources, such as hydrogen cells and biodiesel.

Thinking Green Fosters Innovation and Product Differentiation

Some hotel companies do have green initiatives in their basic business models. Scandic, part of Hilton, is a market leader in the Scandinavian market. In 1995, Scandic introduced the environmental room. The materials in these rooms are selected with consideration for the environment – wood, wool and cotton replace synthetics, plastics and metals. In each room 97 percent of materials can be recycled. All of the company’s hotels in Sweden meet the Nordic Eco-label, one of the world’s most exacting environment and quality standards criterion. Through this effort, the company has reduced its water consumption by 13 percent, its energy consumption by 24 percent and its unsorted waste by 40 percent, thereby differentiating itself as an industry leader and product innovator.

Marriott has taken steps to reduce the environmental impact of its hotels and resorts. The company recently formed a new senior-level Green Council focusing on environmental issues. In January 2007, Marriott announced that the company reduced its greenhouse gas emissions by 70,000 tons since January 2006. Marriott is the first hotel company to become a member of the U.S. Environmental Protection Agency’s Climate Leaders Program and was named as the Energy Star Partner of the Year for Excellence in Energy Management in 2005 and 2006. Almost 200 Marriott hotels already bear the ENERGY Star certification, highest in the industry.

Plan Now to Meet Future Legal Requirements

Changing the way hotels are constructed and renovated makes legal sense. Major cities, including Washington, D.C. and Boston have enacted legislation to require all major private non-residential buildings to comply with green building standards. Most cities are looking to the U.S. Green Building Council’s Leadership in Environment and Energy Design (LEED) Certifications as the green building standard.

In Washington, D.C., starting in 2010, new and substantially improved commercial buildings of 50,000 square feet or more will have to fulfill or exceed LEED New Construction or LEED Core and Shell 2.0 standards. Other major cities, including New York and San Francisco, are currently considering similar legislation.

Developers may obtain LEED Certification by submitting an application to the Green Building Council documenting compliance with requirements of the rating system. There are four levels of LEED Certification: certified, silver, gold and platinum. There are also separate ratings for new construction and existing buildings. The rating system addresses six major areas of environmentally sustainable construction:

1) sustainable sites (e.g., construction on brownfield sites)

2) water efficiency (e.g., increasing efficiency)

3) energy and atmosphere (e.g., reducing energy use)

4) materials and resources (e.g., increasing use of recycled and environmentally certified materials)

5) indoor environmental quality (e.g., improving air quality and having significant natural light)

6) innovation and design process

In 2004, Canada adopted a modified version of the LEED rating system, called LEED-Canada, that is somewhat more stringent than the U.S. standard. Other countries may have their own green building standards.

Operation and Management: Steps to a More Sustainable Resort

Renovating buildings in a resort to meet green standards is a big commitment. Small changes in operations also may make the resort more environmentally friendly. Some examples:

• adopt a linen reuse program in all guest rooms to encourage guests to reuse linens and towels during their hotel stay

• purchase Energy Star appliances wherever possible

• convert resort restaurants into certified green restaurants

• install a solar water heating system for resort pools and hot tubs

• adopt a no-smoking policy in indoor areas of the resort in order to reduce energy use for air treatment systems

• replace electric package terminal air conditioner (PTAC) units with geothermal technology to reduce energy costs

• use drought-resistant native plants in landscaped areas to limit water usage and cut irrigation costs

• replace old laundry systems with water and energy conserving models

• switch to low-flow showerheads, sink aerators and toilets to reduce water usage

• switch from traditional light bulbs to fluorescent lighting in guest rooms and use natural light exclusively in lobby, bar and restaurant areas during daylight hours

• replace outdoor neon signs and exit signs with light emitting diode (LED) and fiber optic technology

For more tips on sustainable resort operations, see: http://www.globalstewards.org/hotel.htm and http://www.greenhotels.com/grnideas.htm.

Carbon offset (also sometimes known as carbon trading) is another important way in which the resort industry is reducing its environmental impact. Carbon offset is the process of reducing an organization’s net carbon emissions, by either (a) reducing emissions, or (b) engaging in activities that increase environmental absorption of greenhouse gases, such as planting trees. Walkwire LLC, a leading provider of automated Business Centers to the hospitality industry, recently pledged to offset the company’s own energy consumption and also that of every new computer installed in a client’s resort. The King Pacific Lodge in British Columbia committed to offset the carbon emissions of all lodge operations and of guest travel to and from the lodge over the next five years. King Pacific Lodge, a Rosewood Resort, is the first resort to pledge to offset carbon emissions of guest air travel. Carbon trading also can involve a company’s payment to an environmental intermediary of an amount, currently about $5.50 per ton, based on the amount of CO2 emissions. The payment of money, rather than the actual reduction of emissions, is not without controversy.

Sustainability Starts at the Top

How does a company encourage its executives and staff to sign on to going green? Experience suggests that a company’s commitment to green initiatives must begin at the top, with its chief executives. Marriott’s new Green Council is led by several of the company’s most senior executives.

The assumption that going green will inevitably increase costs seems to be the primary obstacle in convincing executives and employees of the importance of going green. Correcting that misconception will be key to educating executives and employees alike about new sustainability initiatives. Sustainability projects may also be a useful component in maintaining high morale, generating employee pride.

Sustainable Development as Competitive Advantage

Leading companies, such as Marriott, increasingly view environmentally sustainable development as a source of competitive advantage. Environmental sustainability is not yet a primary consumer driver and most guests do not seek out luxury hotels and resorts solely because they are green resorts. Increasingly, however, guests are interested in the environmental sustainability of the resort as a secondary benefit and as a way of separating close competitors.

The jury is still out as to whether resorts that seriously pursue sustainability initiatives – and effectively publicize these initiatives – can gain a competitive edge in the market. But early results indicate that those who do not get some skin in the game will be left behind.

For more information, e-mail Robert M. Chasnow at robert.chasnow@hklaw.com or call toll free, 1-888-688-8500.