The Franchise on Green

How the Corporate Office Can Facilitate Sustainable Initiatives

By Simon Hudson Endowed Chair in Tourism and Hospitality, University of South Carolina | May 18, 2014

Co-authored by Karen Irene Thal, MES, CHE

Global scrutiny of the hotel industry came to the fore following the 1992 Rio Earth Summit, and international chains were quick to respond, launching early environmental performance systems such as Green Globe 21. Larger hotel companies also drafted and signed the International Hotels Environment Initiative, launching an online environmental benchmarking system for hotels in 2001. Yet a gap between policy and practice is apparent. Despite a plethora of certifications, online information regarding sustainability for the hotel sector and express commitment to sustainable principles, a recent content analysis of annual and corporate responsibility reports for ten major US hotel chains, found that few referenced concrete environmental accomplishments.

At the same time, studies across a variety of international settings suggest that higher rated and chain affiliated hotels, rather than independent hotels, are more likely to implement environmental initiatives. A sampling of hotel managers in Accra, Ghana, for example, found that 3-5 star hotels were more likely to adopt environmental management practices than smaller and lower rated hotels. A separate European study also found that managers in chain-affiliated hotels were more aware and had typically committed greater resources to environmental initiatives than managers of independently run properties. Likewise, a study of the Hong Kong hotel industry found that internal constraints to adopting sustainable practices, such as technical difficulties, were particularly pronounced for lower rated and small-scale hotels. Finally, a survey undertaken in both Hong Kong and China on the motivations of hotel managers to adopt the ISO 14000 Environmental Management Standards, suggests that corporate governance significantly influences decisions about sustainability. No studies that we found, however, explicitly addressed balancing environmental initiatives with franchise requirements.

The focus of our study was a hotel management team that had recently overseen the construction of a new hotel while simultaneously pursuing enfranchisement and Leadership in Energy and Environmental Design (LEED) certification. The hotel we studied was the Holiday Inn and Suites Columbia-Airport in South Carolina, part of the Intercontinental Hotel Group (IHG) franchise. The Columbia hotel opened on Earth Day April 22nd, 2010 and achieved LEED Gold certification for new construction in August 2012. We interviewed the hotel owner, General Manager, Operations Manager, Guest Services Manager, Head Housekeeper, Director of Sales, and Director of Marketing.

Overall, IHG’s support for LEED certification was unequivocally described as “very enthusiastic.” Not only did certification efforts coincide with the launch of the franchise company’s own ‘Green Engage’ program, interviewees described “a big push…to engage this whole green movement” with awards and promotion on the corporate website recognizing franchised properties’ environmental achievements. LEED certification was also described as consistent with corporate mission statements. “At the corporate level, all of the brands….if you read some of their mission statements, incorporate sustainability, each one of them, ” said one interviewee. Another, particularly encouraging trend that our interviewees noted is that incremental hotel business had been generated through corporate accounts where eco-friendly initiatives are increasingly included among selection criteria.

The hotel management team, however, also described challenges associated with enfranchisement and attempts to implement sustainable initiatives. Established brands communicate standards of excellence to both employees and customers, ensuring customer satisfaction and brand loyalty during and after a hotel stay. In addition, these standards inform customer expectations while removing uncertainty from the decision making process with respect to unfamiliar locations. Independent eco-lodges and sustainable hotels, by contrast, are sometimes erroneously perceived as falling short on service quality simply on account of being ‘green’. But brand standards and purchasing policies do not necessarily incorporate environmental criteria. This became apparent when the management team at the Holiday Inn wanted to purchase greener products from suppliers other than those mandated by the franchise company. “So, when (the franchise company) has a certain type of soap that they want you to purchase or a certain type of coffee cup, we found that we were taking a lot time to go through the process of submitting waivers to the franchise, and these are basically your permission or justification to break from what their brand standard is and it could be anything from like the bed linen….being purchased locally versus selecting approved product that has to be shipped from overseas.” With increasing market availability as well as affordability of sustainably manufactured products, corporate purchasing policies may not always have to weigh fiscal and environmental considerations. In the meantime, the hotel management team suggested franchise companies might offer an alternative ‘green’ option that could be vetted to reflect brand quality but would allow hotel managers’ some discretion when it comes to balancing costs with environmental considerations.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.