Sustainability as a source of competitive advantage in the hospitality industry - Literature review Example

Sustainability as a source of competitive advantage in the hospitality industry Literature Review The concept of sustainability in the hotel industry includes the physical environment as well as the operations of the business. So much of the hospitality industry in general has to do with the place, although the industry is thought of in terms of the service it affords the traveling guest. The very design and construction of the facility become an integral part of the sustainability plan of the business, as much as its procedures and programs (Sloan, Chen & Legrand, 2009). The sustainability of a hotel, therefore, must be seen as being composed of varying levels and types of compliance – i.e., elimination of toxic substances in the building and facilities construction, energy and water conservation, sustainability of human capital, compliance of materials suppliers, and maximum utilization of natural light and ventilation whilst minimizing greenhouse gas emissions (Bohdanowicz, et al., 2005). While sustainability is engineered into large hotels, simpler processes are associated with environmental friendliness in small hotels. The differences between them should be noted in order to better appreciate the scope of sustainability issues in large hotels. For small hotels, a significant solid-waste management (SWM) program becomes the principal concern. Small hotels generate wastes that usually end up in landfills, due to the relatively smaller quantities of various types of waste that defy more economical large-scale waste management. It is not true, however, that effective waste management cannot be conducted in small hotels. There are still methods and techniques by which waste can be segregated, recycled, and reduced to minimize and even eliminate contribution to landfills (Radwan, Jones & Minoli, 2010). Impact of green hotels on consumers Empirical studies have come to explore the consumer dynamics relating to sustainable hotels. Lee, Hsu, Han & Kim (2010) sought to determine the view of consumers concerning green hotels, and how the hotel’s green image can impact on their behavioural intentions. The diagram following provides a graphic presentation of the factors considered in the conduct of the study. Structural model to determine influence of green hotel on consumers (Lee, et al., 2010, p. 904) The study takes into account among its assumptions the growing concern among the public about environmental issues in general, and how this affects their viewpoint of the hotel industry. Green technology is viewed herein as a strategic tool that can enhance the hotel’s competitive advantage. This means that as a tool, it is not only a thing that can influence the hotel’s actions, but it also provides a means by which the hotel can influence its customers’ actions. It is not only a requisite in the competitive environment that the company must react to, but it is also an instrument the company can proactively use to change consumers’ attitudes and behaviours, and to align them towards the company and away from their rivals (Lee, et al., 2010). In Lee, et al. (2010), the inputs are provided in terms of the value and quality attributes that customers are able to receive from their stay in the hotel. Value would refer to the benefit that the customer received, such as a restful stay and delicious food preparation. The quality attributes qualify or describe the experience, in terms of degree of pleasantness and satisfaction, or the degree of discomfort and displeasure that the customer garnered from his stay. These inputs create two kinds of images: an affective or subjective image, which appeals to customers’ emotions, and an overall image that includes the objective evaluation of the experience. The overall image also factors in the affective image, which more or less colors the objective impression the customer gets. In a way, this depicts the powerful influence of a customer’s feelings that may reverse or overcome the objective evaluation – i.e., a poor objective assessment may appear to be better because of positive feelings the customer had about his experience, or a good objective assessment may appear to be worse because of the negative feelings the customer had about her experience at the hotel. When the customer has formed his or her overall image, a firm and lasting opinion is created that the customer will be willing to act upon or share with his or her friends and acquaintances. These actions would be to spread the opinion by word-of-mouth, to decide to pay additional for the experience, and to recreate the experience by visiting the hotel again. Needless to say, if the overall image formulated in the mind of the customer is a negative one, then the word-of-mouth is going to be a negative recommendation, and vice-versa. Likewise, the willingness to pay a premium (or a higher price) may be of different degrees, and it may also be complete refusal to pay a higher price. Finally, the intention to revisit the hotel may be a yes or no (Lee, et al., 2010). Sustainability at the HILTON In October 2009, Hilton Hotels renamed itself Hilton Worldwide, and undertook an identity overhaul which included a new logo for the group, a new leader, and a new emphasis on services that cater to the lifestyle market. The decision to attach “Worldwide” may not seem highly significant in the ordinary sense, but as Freed (2009) observed, the change draws attention to the shrinking world when international travel has become more commonplace and the overseas market has become more conducive to the accelerated development of the hotel industry. Together with the new name comes a new company vision, mission, and key strategic imperatives, one of which is the intensified effort to attain sustainability. The effort to make Hilton hotels more environmentally friendly may be seen throughout the hotel chain. Recently, Inn at Penn, a hotel on the University of Pennsylvania that belongs to the Hilton group, updated its interior design and technology facilities, during which it was able to cut its energy use by 30 per cent. The innovations cost the company $10 million, to which the government contributed a $100,000 energy conservation improvement grant to cover part of the cost. Although the company incurred huge expenses to undertake the project, the change has earned praises for the hotel from a largely appreciative academic community, to which most of its clientele are connected. These clients are heavy users of technology, and at the same time they are also highly concerned with the environment and sustainability. Because of this, the efforts of Inn at Penn created a lasting impact on them, making it safe to assume that these customers will be more frequent visitors to the Inn. In the long term, the reduction of the hotel’s carbon footprint and the consumption of energy are expected to save the hotel additional operational costs in electric and natural gas heating bills (Young, 2011). To gain an appreciation of the innovations adopted at the Inn, which may stand as a model for other hotels, an account of how it works is provided as follows (Young, 2011, p. 30): (1) A customized automatic temperature control and lighting system was installed, and rooms were retrofitted with special keycard readers, radio frequency-enabled light switches, smart thermostats and switching wall outlets. Each of these components communicate with each other with the use of Z-Wave technology. (2) After the electronic keycard is used to open the door, the guest places it in a slot mounted on the wall in the room adjacent to the door. The insertion of the card triggers a “comfort mode” action that triggers a response in the lighting and heating/cooling system. Two lights immediately turn on, one at the entrance, and the other in the room, together with the heating or air conditioning. (3) Before it switches to “comfort mode,” the temperature levels are at “energy efficient” mode which is preset by the hotel, so that it remains within a set range beyond which it does not go even when unoccupied, so the room never heats up to the outside ambient temperature even in summer. When a guest enters, the temperature automatically adjusts to five degrees cooler, or five degrees warmer in the winter. Guests, if they so wish, may adjust the temperature according to their preference. (4) There are certain lights which may be turned on or off by the guest by using a five-button controller on a wall-mounted crystal display. (5) When guests leave the room the lights and television are automatically turned off and the temperature control returned to “energy efficient” mode. While guests are still checked in, however, the appropriate electrical outlets for charging personal devices such as laptops, mobile phones, iPads, and so forth, remain on even after the guest has left the room. (6) When guests check out, a 10-second delay is programmed to allow for enough time for the guest to remove the key card and gather his / her luggage, and still have their pathway out the door lighted (Young, 2011). In a time of economic crisis and financial austerity, the sustainability effort is actually a welcome opportunity to reduce costs for both the hotel and the environment (Sloan, et al., 2009). This is true particularly in the consumption of energy, water and other utilities, where the adoption of more sustainable measures produces welcome savings for the business without lowering the quality of service. The cut-downs in the wasteful use of resources have been substantial: for instance, Starwood Hotels and Resorts made a commitment in 2010 that throughout its chain of more than 1,000 properties, there will be observed a 30 per cent reduction in the consumption of energy for each available room by the year 2020, and 20 per cent cut in water consumption (LHonline, 2010). A similar direction had been adopted by the Hilton, which had likewise adopted Light Stay, the hotel’s proprietary system for measuring sustainability. The system employs indicators that keep track of some 200 separate operational practices (e.g. housekeeping, paper product use, food waste, chemical storage, air quality, and transportation, according to LHonline, 2010, p. 32). Light Stay was used to monitor operations at 1,300 Hilton properties, and as a result of that monitoring system the hotel chain was able to save energy sufficient to provide power to 5,700 homes for one whole year, to save enough water to fill 650 swimming pools, and to reduce carbon equivalents to that emitted by 35,000 cars (LHonline, 2010). Aside from the cut in expenses, hotel companies also receive the benefits of an enhanced social image. Rather than feel short-changed or cheated, many customers praise the company’s environmental sustainability measures, and associate this good impression to the company’s brand name and reputation. For the Hilton chain, the aim is to ultimately reduce energy consumption from direct operations by 20 per cent; to reduce carbon emissions by 20 per cent; to reduce output of waste by 20 per cent; and to reduce water consumption also by 20 per cent, all by the year 2014 (Meetingsnet.com, 2008). While the older hotels necessitate renovations and changes in order to transform them from traditional to green hotels, the new hotels being constructed are designed immediately to be sustainable from the beginning. For the Hilton chain, one such hotel is the Hilton San Diego Bayfront Hotel which opened in 2008. It is California’s newest waterfront highrise hotel that boasts of state-of-the-art engineering technologies and green field construction. As such, it had to meet very stringent requirements that are imposed on the new skyscrapers hotels. Because of extreme care dedicated to the design and construction of the hotel, Hilton San Diego Bayfront now operates at an extremely high level of energy efficiency, with the ability to easily expand or enhance any part of its energy conservation systems as the need may arise (Engineered Systems, 2010). Summary Sustainability requirements in hotels are a requirement imposed on this industry which it must react to and comply with. However, sustainability compliance may be put to great advantage by the hotel industry. The study by Lee, et al. (2010) demonstrated that there is a possibility for sustainability strategies to create competitive advantage for hotels to gain an edge over their competitors and win a greater share of the market. From preliminary studies, it is possible that the Hilton Hotel, particularly that operating in the UK, may take advantage of sustainability measures and turn them into customer-winning strategic advantages. This is what the study is proposing to discover. References Bohdanowicz, P; Simanic, B; & Martinac, I 2005 “Sustainable Hotels – Environmental Reporting According to Green Globe 21, Green Globes Canada / GEM UK, IHEI Benchmarkhotel and Hilton Environmental Reporting” 2005 World Sustainable Building Conference. Tokyo, 27-29 Sept 2005, : Sustainability as a source of competitive advantage in the hospitality industry pp. 1642-1649 Engineered Systems 2010 “Hotel succeeds with waterfront views, upfront BAS needs” Engineered System, June 2010, pp. 14-18 Freed, J Q 2009 “Hilton refreshes corporate identity” Hotel and Motel Management. Vol. 224, no. 12, 19 October, pp. 1-15 LHonline.com 2010 “Chains Embrace Energy Management” Lodging Hospitality. August 2010, p. 32 Lee, J-S; Hsu, L-T; Han, H; & Kim, Y 2011 “Understanding how consumers view green hotels: how a hotel’s green image can influence behavioural intentions.” Journal of Sustainable Tourism. Vol. 18, No. 7, September, pp. 901-914 Lodrige-Kover, D 2006 “Launching a strategic account management program at Hilton Hotels Corp.” Velocity. Vol. 8, No. 1, pp. 27-30 Meetingsnet.com 2008 “Hilton, Marriott Work to Save the Planet,” Financial and Insurance Meetings, July/August 2008, p. 14. Radwan, H R I; Jones, E; & Minoli, D 2010 “Managing solid waste in small hotels.” Journal of Sustainable Tourism, Vol. 18, No. 2, March, pp. 175-190 Sloan, P; Chen, J S; & Legrand, W 2009 Sustainability in the Hospitality Industry. Butterworth-Heinemann/ Elsevier Taylor, I 2008 “Eco-Friendly Is The Only Future.” Travel Weekly (UK), 3/21/2008, p20-21 Young, S J 2011 “Inn at Penn updates reduce hotel’s carbon footprint,” Hotel Management. 20 June 2011, p. 30. Read More