The Savoy Hotel in Central London - Essay Example

?Savoy Hotel Introduction The Savoy hotel in central London is considered as one of the most famous hotels in the world. Opened in the year 1889, theSavoy hotel became a symbol for luxury, impeccable quality and highly efficient service. Famous personalities including Charlie Chaplin, Frank Sinatra and Oscar Wilde were frequent guests at the hotel while the number of distinguished guests and dignitaries who stayed there is in itself a piece of history. Situated along the banks of the Thames River, the Savoy hotel is currently managed by the famous ‘Fairmont Hotels & Resorts’ group of Canada (Allsop, 2009). The hotel was closed for renovation in 2007 for an estimated duration of 15 months and a budget of ?100 million. Growing competition in the local hospitality sector, changing customer preferences and the rising importance of green practices were the primary reasons behind this decision to undertake an extensive of the entire hotel. The hotel remained closed for nearly 3 years and opened in 2007 after investing over ?220 million (an excess of ?120 million over the initial budget) in the renovation and replacement of its entire infrastructure (Schwab, 2010). All along, the emphasis on the part of Savoy’s management was to preserve the hotel’s identity, elegance and its old-fashioned glory. Notable features such as the statue of Peter II or the American bar were retained although having undergone extensive makeovers and improvements. In simple words, Spenceley (2008) terms the restoration project implemented by Savoy can be termed as an elaborate improvement. A lot has been written about the green makeover that the hotel underwent during this phase. While the identity of Savoy as a luxury hotel or a place of extravagance does not require any introduction, the question does arise over just how green the hotel has become. The resulting strategies that the hotel’s management has adopted to market and promote its efforts towards environmental safety and customer satisfaction present an interesting situation with the reopening of the hotel. This paper describes an analysis that begins with an analysis of the key internal and external factors that influences the strategic decisions of the Savoy Hotel. The effectiveness with which the hotel has positioned itself in the market post-renovation and the steps taken to maintain and improve customer satisfaction are discussed thereafter. Key macro and micro factors influencing Savoy Hotel The effects of global warming and climate change are being felt the world over. Travelers and customers are increasingly aware of this growing problem and are becoming more active towards reducing their carbon footprint. Renewed needs from customers for green solutions and practices and rising costs associated with conventional methods of operation have prompted some much needed change on the part of the hospitality sector in the UK. The restoration of the Savoy hotel that commenced in 2007 was mainly driven by these considerations and the need to adopt a greener image (Peeters, 2010). Another factor that prompted the Savoy hotel to undergo the expensive renovation was the constantly rising costs as the hotel had previously not considered long-term savings through cheaper, greener solutions (Roth, 2011). The latest renovation and reopening of the hotel in 2010 has also led to the question of how much farther the hotel must go in order to become sustainable. Competition from rival hotels in implementing similar solutions to aid in environmental protection is another trend that facilitated a change in strategy on the part of Savoy hotel. Since 2006, the UK hospitality industry has witnessed a rapid surge in energy costs due to rising fuel prices (Horner, 2008). Prices for conventional fuels like gasoline and natural gas have been on higher over previous years. The ongoing tension in the Middle East and the resulting volatility in the markets have also contributed to this increase in fuel costs. Hotel chains like the Hilton International and the Grosvenor House Hotel have realized the importance of sustainability as part of their corporate and marketing strategies and are taking the necessary steps to develop internal programs on sustainability. The Savoy Hotel understands that any reduction in consumption levels and the promotion of sustainable practices can only be reflected through its employees. As such, the hotel has developed a unique training program to educate its workforce on environmental sustainability. Part of this strategy is also influenced by the issue of Climate change (Allsop, 2009). Hotels like Savoy that emit large amounts of greenhouse gases on a per-capita basis are increasingly under pressure to demonstrate some leadership towards tackling global warming. Thus, corporate social responsibility is another important consideration that has shaped the hotel’s recent decisions. Middleton (2009) argues that hotels are also progressing towards creating a totally non-smoking environment within their interiors. Customers and travelers who depend on hotels such as Savoy during their stays in London have long pressed the desire for cleaner air. Thus, developing a smoke-free and dust-free environment within the hotel premises is an important challenge for Savoy if it is to attract customers. The Savoy Hotel also has a business centre that contributed as much as 37% of the hotel’s revenues in 2009 (Briggs, 2010). Meeting planners today prefer hotels that utilize green practices when choosing an appropriate location for conferences and meetings. Savoy Hotel must position itself along this dimension if it is to benefit from this trend that is bound to receive widespread acceptance in the future. The Savoy Hotel has been under the management of the Fairmont Hotels & Resorts since 2005. The hotel is regularly featured in some of the most prestigious trade shows across the world. Events such as the ‘Climate Week’ and ‘Savoy Lecture’ organized by the British Hospitality Association (BHA) have been effective platforms for the Savoy Hotel to promote its initiatives in the past (Morley, 2010). With growing coverage of these events and wider recognition of the hotel on an international scale, especially in the US and Canada, the Savoy hotel can utilize this situation to establish a better environmental image. The hotel industry in the UK is also being scrutinized for carbon offsetting programs. Deriving power from renewable sources of energy and reducing the emission of greenhouse gases has thus become important to develop a renewed brand image. Related practices adopted by Savoy in this regard are discussed in the next section. Hotels in other countries such as the Starwood Capital Group have completely refurbished their market identity and have recast themselves as environmentally friendly hotels (Krishnamoorthy, 2009). Nevertheless, the industry is awaiting the emergence of a hotel brand that can be termed ‘totally green’, at least at the service level. The changes implemented by Savoy as part of this renovation clearly reflect a thoroughly planned utilization of this trend. The above factors are some of the environmental issues and determinants that have influenced the strategic decisions taken by the Savoy hotel since 2007. Manageable, measurable and environmentally conforming strategies have been the cornerstone of the recent renovation at Savoy and the widespread change in its operational activities. The hotel also believes that the investments made in this process will help it become more profitable in the long-term. Market positioning of Savoy Hotel Evidence available from various reports and articles suggests that the Savoy has been determined to become environmentally responsible since 2006. Prince (2010) says that the hotel was recognized as the most environmental-friendly hotel by the parent company – Fairmont Hotels and Resorts – in 2006 out of a total portfolio of 72 luxury hotels across the world. The Savoy hotel has invested nearly ?3 million for the installation of a new heat and power generating plant that conforms to the latest Environmental permitting regulations laid out by the Environment agency. The new plant will reduce energy requirements by over 42% besides cutting down carbon emission by over half of the preceding levels. The hotel now processes over 40% of the waste produced through recycling and has introduced new computers and digital equipment in all rooms to reduce the consumption levels of paper (Gossling, 2011). The hotel has also stated that it will now be reducing over 14 tons of carbon dioxide emissions as all wastes generated from food items are being utilized further to produce renewable energy. Guest transfers are now achieved using new hybrid vehicles that run primarily on rechargeable batteries. All lighting fixtures throughout the hotel are now controlled through a central system to facilitate low-energy consumption. The lighting is controlled by a grid of sensors that operate in three modes – vacant, occupied and booked (Roaf, 2009). In an effort to enhance its self-image, the company states that temperature in a vacant room is automatically set to an ambient temperature and can be increased or decreased depending on the weather and arrival of guests. While this computerized system that is integrated into the central booking system of the hotel was expensive to install, the company specifies that it will help in significant cost-cutting in lighting and heating, which constitute over 60% of the hotel’s energy bills. In fact, the entire 670 strong workforce of the hotel had to undergo a rigorous environmental training program prior to the reopening of the hotel so that they could easily manage these new environmentally efficient systems (Becken, 2010). The employees are also taught about the Green partnership program of the Fairmont group to improve and contribute towards operational sustainability. The hotel’s restaurants have also undergone a thorough revamp in order to generate some favorable perceptions among customers. Menu options clearly specify that most of the food items are produced through organic methods and sourced through local farmers. The hotel also finds some notable mention in the prestigious ‘Capital Growth Program’ as it developed a new herb garden in coordination with the Embankment Garden team of the Westminster council. ‘Thames21’- the primary charity wing of the hotel – has also received widespread coverage with the active involvement of the hotel’s staff in cleanup initiatives of the Thames River (Ransley, 2010). The hotel has also popularized its new ‘eco-meet’ concept under the business centre is now equipped to host ‘green’ conferences. While the Savoy hotel has begun adopting all the technologies and practices described above, there is still a lot of room to cover. The hotel’s General Manager, Mr. Kiaran Macdonald, has acknowledged that hotels in other European cities are much further ahead in terms of recycling capacities. For instance, Berlin recycles over 43% of its waste while Geneva has achieved an efficiency rate of 48% in this regard. The hotel hopes to reach a target recycling level of 45% by 2014 and increase it to 60% by 2025 (Schwab, 2010). The Savoy hotel can also explore opportunities to generate energy through renewable systems. For instance, it could utilize the waste generated from daily use to produce energy for electrical and heating purposes, at least to a partial extent. However, production systems necessary to achieve this are quite expensive and the hotel may have to explore the viability of such investments in its future plans. Spenceley (2008) believes that the Savoy hotel can also draw inspiration from the recently introduced ‘Barclay’s cycle hire’ program by promoting bike-based tours for visitors to the city of London as healthy substitutes to conventional automobiles. Developing customer relationships Customer relationship management (CRM) has been a core element of the Savoy hotel’s environmental and corporate strategy. The recent changes have been undertaken keeping in mind the changing preferences and tastes among customers. The hotel has partnered with city agencies to promote London as a ‘green’ city. The most striking example of this initiative is the much promoted ‘Elements Stay Package’ which is entirely based on environmental friendly practices (Boyce (2009). Guests who opt for this tour are given a free travel card to use the public transport system and have the option to experience a green tour of London through select travel partners. The hotel has designated Mr. Nicolar Olivier as its ‘Green Butler’ whose primary responsibility is to assist guests in finding the best shops, restaurants and locations that offer organic options (Allsop, 2009). Guests also have the opportunity to assist in the cleaning of the waterways of the Thames River through the Thames 21 initiative (Middleton, 2009). The Savoy hotel is a member of the UK sustainable restaurant association and has recently undergone a quarterly audit to receive accreditation ratings from the Green Tourism Business Scheme and the Green Key Eco-rating program (Morley, 2010). The closure of the hotel for a long period of 3 years meant that many of the customers had begun to prefer other prominent hotels in the city. In fact, the general manager of Savoy himself acknowledged that the hotel was forced to redirect customers to other hotels during the renovation phase leading to a decline in customer share. The huge ?270 million makeover had also led to the question among customers whether the hotel would become more expensive once it reopened (Prince, 2010). The management team at Savoy realized all such apprehensions among customers and were clearly understood the importance of developing new long-term relationships with customers (Gossling, 2011). As such, the prospect of enhancing tariffs was turned down and a move to attract new customers through competitive prices was selected. The Savoy hotel also understands that much of its popularity is attributed to its rich history and legacy and the ambience that its interiors reflect. The hotel hired renowned interior designers like Pierre Rochon to redevelop the interiors while preserving the original taste and spirit all along (Becken, 2010). In fact, this strategy at upholding a popular legacy had received widespread praise in the press and contributed to the resurgence in business for the hotel right from the moment it reopened. Over the years, several customers had expressed the willingness to experience the riverside suites although the hotel could often not fulfill this desire due to limited availability and constant demand. The Savoy hotel has not got 38 new suites and rooms facing the Thames River that offers some stunning views of bustling city life in London (Ransley, 2010). Additionally, the hotel has introduced a historical theme into its interiors by dedicating various suites to specific personalities like Charlie Chaplin and Frank Sinatra who were popular guests at the hotel. Thus, it appears that the Savoy hotel has considered all possible aspects in developing a sustained customer relationship. Besides borrowing ideas from latest trends like environmental protection and sustainability, the hotel has been careful to preserve its distinct identity by preserving many of its familiar features such as the Thames foyer or the Beaufort bar and has relied on the famous Edwardian theme which has been a trademark of its luxury offering. Conclusion The findings described in the preceding sections clearly indicate that luxury and customer relationship management are the hallmarks of the Savoy hotel’s marketing and environmental strategy. Various changes and replacements have been made within the hotel’s internal departments and activities to reduce the carbon footprint and environmental impact. It appears that the hotel understands the effects on the local environment due its widespread energy intensive activities and has taken the necessary steps to implement long-term and sustainable solutions that are profitable over the coming years. Some of the notable changes include various energy conservation schemes and related systems such as the computerized metering system that keeps a comprehensive and precise track of the hotel’s energy usage at regular intervals (Becken, 2010). Old steam boilers that were based on obsolete technology and had become highly inefficient were also replaced by newer systems that consume less energy and release fewer after-products into the atmosphere (Peeters, 2010). The Savoy hotel is one of the largest hotels in the UK and consumes a vast quantity of resources including fuels, food items, furniture, water etc. For example, servicing all the 268 guestrooms and providing them regular laundry services on a daily basis leads to a significant carbon footprint. This trend only increases when one considers all the energy consumed through lighting and heating. Creating change and initiating best practices in all these segments has set a clear example to the broader industry by establishing that even a big entity like the Savoy Hotel can reduce its environmental impact without compromising on luxury. In fact, the hotel’s general manager, Mr. Macdonald, stated that luxury has undergone a tremendous change over the past few years. He expressed that while luxury was previously associated with materialistic privileges, customers today were seeking a flavor of integrity and authenticity when requesting such facilities (Ransley, 2010). Thus, from an overall perspective, it can be established that the Savoy hotel has indeed given a genuine consideration to all parameters of environmental sustainability and devised unique solutions to accommodate them within its corporate strategy. The hotel has reduced its environmental impact in every department ranging from heating and lighting to cooking and waste disposal and has sought to adopt renewable sources wherever possible. References 1. Allsop (2009), Engineering work in public buildings: power, lighting, heating, ventilation, water supply. University of Wisconsin - Madison. 2. Becken (2010), Tourism and climate change: risks and opportunities. Multilingual Matters. 3. Boyce (2009), Climate change and the media. Peter Lang. 4. Briggs (2010), Successful tourism marketing: a practical handbook. London: Kogan Page Publishers. 5. Gossling (2011), Carbon Management in Tourism: Mitigating the Impacts on Climate Change. London: Taylor & Francis. 6. Horner (2008), Consumer behaviour in tourism. Chicago: Butterworth-Heinemann. 7. Krishnamoorthy (2009), Environmental Management. PHI Learning Pvt. Ltd. 8. Middleton (2009), Marketing in Travel and Tourism. New York: Butterworth-Heinemann. 9. Morley (2010), Low carbon technologies in a green economy: fourth report of session 2009-10, Vol. 2: Oral and written evidence. The Stationery Office. 10. Peeters (2010), Climate change and European emissions trading: lessons for theory and practice. New York: Edward Elgar. 11. Prince (2010), Frommer's London 2011. New York: John Wiley. 12. Ransley (2010), Developing hospitality properties and facilities. New York: Butterworth-Heinemann. 13. Roaf (2009), Adapting buildings and cities for climate change: a 21st century survival guide. Architectural Press. 14. Roth (2011), Hotel Savoy. University of Michigan. 15. Schwab (2010), The Travel & Tourism Report 2008. World Economic Forum. 16. Spenceley (2008), Responsible tourism: critical issues for conservation and development. Earthscan. Read More