Green Hospitality Takes Global Hold: Part 1

| February 03, 2009

Since 1987, the movement towards sustainability has expanded across the globe as governmental and nongovernmental organizations, corporations and consumers are increasingly focused reducing their environmental footprints. The hospitality industry is no exception and the concept of sustainability has begun to gain momentum in this sector through an array of regional certification programs and initiatives developed by governments and private hotel companies.

In excerpts from its Global Hospitality InsightsErnst & Young explores sustainability in the lodging sector by exploring some of the major trends and programs initiated across the globe to encourage industry participation and implementation.

United States
Until the 1950s, eco-friendly practices in the US were primarily driven by economic factors, such as minimizing costs and waste. In contrast, the current environmental movement has gained momentum from new regulations and growing environmental awareness.

L
EED certification (Leadership in Energy and Environmental Design) is one of the most obvious ways that hotels can benefit from green related tax breaks and cost savings, as well as enhance their market appeal to customers who are demanding green products. Many states are rewarding developers of LEED-certified buildings with tax breaks. In New Mexico for example, tax breaks range from $9,000 to almost $25,000 per project.

Operators can save on operational expenses as well, because LEED-certified buildings are more energy efficient. LEED-certified buildings have the ability to use 30% to 50% less energy than conventional buildings, 40% less water, and up to 70% less solid waste disposal. Furthermore, TripAdvisor's 2007 ecotourism survey reports that 38% of surveyed travelers have stayed at an environmentally-friendly hotel, 9% specifically seek out environmentally-friendly hotels and 34% would pay more to stay at an environmentally-friendly hotel.

LEEDing the way
The first LEED-certified hotel in the US was the Inn & Conference Center at University of Maryland University College, completed in 2005. Since then, only a handful of hotels have successfully achieved LEED certification in the US, including the Hilton Vancouver, Washington, and the Orchard Hotel in San Francisco, California. Currently, according to the USGBC, 451 hotels have achieved or registered for LEED certification. In addition, the American Hotel & Lodging Association ("AH &LA") is working with the USGBC to create a LEED rating system specific to the hotel industry.

While the majority of the hotels applying for LEED certification are in the luxury, upper upscale and upscale tiers, there are also a few midscale brands, such as Holiday Inn, La Quinta Inn & SuitesFairfield Inn and Hampton Inn. The surge of interest in LEED certification appears to be driven by decreasing premiums for green building development costs, which a few years ago could run upwards of 20%. In 2006, Atman Hospitality Group, Inc., developer of Gaia Napa Valley Hotel & Spa in Napa Valley, California, reported a 15% premium to build the hotel, whereas the newer Gaia Anderson Hotel in Anderson, California is built to the same LEED standards as Gaia Napa Valley, but the cost premium has been reduced to only 5%.

Greening operations
Aside from building green, hotels have become increasingly active in implementing green practices. Hilton Hotels Corporation saves water through towel reuse, retrofits hotel rooms with lower-wattage compact fluorescent light bulbs and benchmarks environmental performance. Marriott International focuses on clean air, wildlife preservation, waste management and cleanup campaigns. The company has also committed to reducing its energy use by 6% per guest room from 2005 to 2010, protecting 1.4 million acres of endangered rainforest, and reducing its global environmental footprint. The Willard InterContinental in Washington, DC engages in social improvement efforts, such as employee volunteerism and supplier diversity programs.

Green programs can provide a competitive advantage as long as green activities are still optional in the market. However, over time, green practices will become a baseline requirement to doing business in the hospitality industry, particularly as the cost of nonrenewable energy continues to increase. Thus, those companies with business models that revolve around green practices will have the strongest opportunity of achieving a "sustainable" competitive advantage.

Middle East
Despite having more than 60% of the world's oil reserves and ironically deriving much of its wealth from fossil fuels, the Middle East, and in particular, the United Arab Emirates, have been aggressively seeking alternative energy sources and are actively developing sustainable mixed-use hospitality and real estate projects. Although the movement towards sustainability is in its infancy in the region, recently unveiled projects are mega-developments, integrating advanced technology and ultra-modern design. Greatly supported by both public and private entities, the region is experiencing a significant movement towards sustainable development with prevalence of preservation and the development of alternative energy resources surfacing in small luxury hotels as well as basic economy lodging.

Luxury resorts pioneer the movement
The region's initial movements toward sustainability started more than a decade ago. It was the Al Maha Desert Resort & Spa, Dubai's most celebrated luxury resort, which pioneered environmentally friendly lodging in the Middle East. The resort, located within the 225-square-kilometer Dubai Desert Conservation Reserve, was awarded by National Geographic as one of the world's best ecotourism models. In addition to its construct, which was built to embrace the indigenous culture, wildlife, desert habitat and environment of the region, Al Maha's environmental focus is expanded in other sustainable ways such as with the treatment of water which is fully recycled and returned to its groundwater source via a unique irrigation system. This resort, which is managed by Emirates Hotels and Resorts, has set a precedent in the region on how to make ecology work for hospitality.

Six Senses, a luxury resort hotel company, followed the environmental footpath by contributing to the conservation of the natural environment and supporting the well-being of communities in the Middle East by recently opening its Zighy Bay resort in Oman. The Thailand-based hotel company has created an environmental management system and Environmental & Social Sustainability policy that is integrated into each hotel it operates. The sustainability program consists of a Holistic Environmental Management Program (HEMP) aimed at the environmentally friendly operation of Six Senses' SERF. It is comprised of 0.5% of total revenue from each resort which is invested in initiatives for sustainable development, an environmental awareness and capacity development program as well as various corporate partnership programs.

Greening made affordable
While ecological lodging in the Middle East has primarily been limited to luxury travelers, the recent launch of ECOS Hotels, Coral International's eco-friendly budget chain, allows ecological accommodation to be more accessible to all travelers. The region's first environmental-friendly budget hotel is expected to open in Dubai by 2009. Besides incorporating green practices such as energy efficient light bulbs, keycard-activated lights in guestrooms, and sourcing furniture from sustainable forests, in its operations, ECOS Hotels is teaming with international environmental conservation groups and emphasizes an efficient and economic hotel design in order to create a green approach to hospitality. Hospitality Management Holdings (HMH), the brand's parent hotel management company currently operates properties in the Middle East and North, South and East Africa. The group anticipates expansion into other markets with the target of operating 25 hotels by the end of 2008.

Part two of this study will explore the green hospitality trends across Asia and India, with more global areas to follow.
 

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