The 3Ms of Sustainable Hotels: The Challenges of Measurement, Management and Monetization

By Deborah Popely Assistant Professor, School of Hospitality Management , Kendall College | April 26, 2015

Sustainability is well-established in the hotel industry. As sustainability as a business discipline continues to mature, the question for hotel executives has changed from "should we do this?" to "how do we manage this?" and more specifically, "how do we evaluate, document and justify investments in sustainability and assess whether they add value to bottomline?"

In conversations with hotel sustainability leaders, practitioners and academics, three ongoing issues stand out, which I refer to as the 3M's of sustainable hotel management. The first M is measurement, and the many challenges of capturing, analyzing and maintaining meaningful data about various aspects of sustainable performance. The second M relates to managerial decision-making, in particular evaluating strategic alternatives in terms of their contribution to operational and marketing goals, and then communicating those decisions with different stakeholder groups. The third and perhaps most important "M" is the ability to translate sustainability outcomes into financial benefits that reflect their real business value, giving the hotel executive the tools to make better investment decisions.

Measurement

The old adage that you can't manage what you can't measure is especially true when it comes to environmental and social sustainability. Without baselines and accurate progress reports, it is impossible to know whether your efforts are worth the investment of time, effort and money. That is why nearly every major hotel brand has established measurable sustainability goals that require properties to report energy consumption, water consumption, waste management and other relevant indicators on a regular basis. Although these programs provide greater clarity and standardization within the brand family, they do not alleviate many other problems experienced by hotel executives at the property or regional level. These include:

  • Staff Expertise - Executives report that many hotel employees lack the basic data analysis and report preparation skills needed to set up and maintain sustainability programs. Outside of the facilities engineering arena, many lack experience working with numbers and tracking information through different parts of the operation. According to one recent study, hotel general managers remarked that young professionals are bringing great respect for the environment with them to the workplace. However, these young recruits needed greater understanding of the operational, data management and financial skills to bring their ideas to fruition (1).
  • Tools and Systems - Hoteliers can be overwhelmed by the many different tools and systems available for measuring sustainability. Some are primarily designed to promote a vendor's products and services. Few are hotel-specific. Determining which tools are most credible, unbiased and applicable to a property's specific needs can be time-consuming. Executives note that managing and maintaining these systems over time also can be difficult in light of shifting priorities, budgetary constraints and staff turnover.
  • Standardization - When it comes to sustainability, there continues to be a lack of general consensus about what should be measured and how. Dashboards vary from brand to brand, among different certifying agencies and between different reporting platforms and indices (GRI, CDP, Dow Jones, FTSE4Good, Climate Counts, etc.). Fortunately, the industry has coalesced behind the Hotel Carbon Measurement Index (HCMI), with more than 15,000 hotels around the world using the methodology to calculate and communicate the carbon footprint of hotel stays and meetings(2). Nonetheless, hospitality sustainability is still quite a ways away from achieving the level standardization that could align the performance of properties, groups and brands. For instance, as of 2011, only about 10,000 hotels tracked energy using the USEPA's Portfolio Manager and of these, only 500 benchmark their performance against other hotels using the tool(3).

Management

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.