By Jeff Slye, Chief Evolution Officer Business Evolution Consulting
I have two questions I’d like to pose to the hospitality industry, particularly to the hotels, hotel management companies, and investors that do not have a sustainability or green platform for their property or properties:
1) What data or additional information do you need to hear or read to illustrate to you and your stakeholders that investing in ‘green’ is critical to your revenue stream and attracting and retaining customers?
2) If there is consistent information from 3rd party survey data, direct customer feedback, and comments from your competitors that tells you that your customers and prospects are actively searching out and spending money with green hotels, would you make the investment to go ‘green?’
The above two questions are the primary ones hotel company decision-makers should be asking themselves in this economic climate, regardless of the other business benefits that come from ‘green’ programs such as operational efficiencies, cost savings, employee values connection, marketing, and improved public relations. This article will help answer these questions and will use hard data and real case studies to demonstrate the growing influence by today’s green-oriented travelers (which include corporate, individual, and group business). In my work assisting companies in developing their green and sustainability strategies we have seen first hand that there is real money currently being lost or gained in this space and it is directly connected to a hotel’s environmental commitment…or lack thereof.
Over the past several years more and more surveys have been done by third party and trade organizations to try and capture and understand the growing trends around the green-oriented customer. Within the past two years, they are consistent in expressing that travelers not only have an interest in green hotels, but more importantly actively seek out these hotels. In reviewing these data points, hotels and companies need to ask themselves where they would fit in these respondents’ hearts and minds.
Conde Nast Traveler is one of the industry’s most respected organizations and its April 2009 survey is viewed as a strong and credible data source.
According to the survey:
• 87 percent of respondents said it is important that a hotel is environmentally friendly
• Almost 75 percent of respondents said they are influenced by a hotel’s environmental policies when deciding on a hotel
National Leisure Travel MONITOR’s 18th annual publication which came out a month later in May 2009 reflected similar trends in traveler behavior. Its survey interviews a panel of more than 1,500 travelers from various demographics and backgrounds that at a minimum have taken a leisure trip away from home greater than 75 miles and had an overnight stay. National Leisure Travel MONITOR pays special attention to having a broad spectrum of respondents to offer one of the best samplings of overall trends around travel.
Some of the results:
• 80 percent of travelers consider themselves environmentally conscious
• 38percent of leisure travelers would select an environmentally friendly hotel if they knew about the hotel’s commitment to the environment
• 30 percent said they would pay more for an eco-friendly hotel, 60 percent said they would pay up to 9 percent more
Deloitte Consulting conducted a survey in May 2008 that found business travelers go green on the road. They surveyed more than 1,100 travelers to better understand the habits and behaviors of business travelers and the ‘green’ hotel movement. Adam Weissenberg, the Deloitte Tourism, Hospitality & Leisure leader who oversaw the survey stated, “Our survey shows that green concerns have made their way on to the business traveler’s agenda. Business travelers understand the issues and are trying to do their part in being more environmentally responsible when they are on the road.”
• 95 percent of respondents to Deloitte’s survey think that lodging companies should be undertaking green initiatives
• 90 percent of business travelers look to green while away
• 38 percent of survey respondents have taken steps to determine whether a hotel is green
• 40 percent of survey respondents said that they would be willing to pay more for green lodging
• 16 percent of survey respondents said that a green concern or issue had influenced their decision to not stay at a hotel
The above surveys paint a very strong picture that both leisure and business travelers will actually seek out and direct business to those hotels that have environmental programs. Therefore, the new questions from this data are: (i) Are you included in that pool of customers and prospects that are researching and selecting these hotels because of their green values?
(a) if “yes,” are you actively promoting and communicating what you are doing to your business and leisure customers and prospects?
(b) if “no,” what is this costing your business and hotel? Even with an ultra-conservative approach and you discount these 38 percent figures to just 20 or 15 percent, can you still afford to give up that share of the market?
Direct customer feedback
In addition to compelling survey data, customers and prospects are sharing their commitments to build better relationships with companies they do business with and emphasizing environment responsibility will play a role in those decisions.
In our work, we have witnessed first hand major companies such as Microsoft, Wells Fargo, and Banana Republic, and many others, direct business to sustainable hotel options when given the choice between otherwise comparable properties. Most recently, one of our clients (Destination Hotels and Resorts) booked over 400 room nights of new business with an international group that chose their property over 3 other comparable hotels and the customer said it was their Destination Earth (link) program that put their property over the top. It is clear from the above, and further reinforced in this economic climate, that money is being spent where companies and individuals can link their values (environmental and otherwise) to the organization that is getting their business.
This values connection between organizations is powerfully reflected in the behavior of the world’s largest companies and their new relationships with their vendors and suppliers. IBM‘s supply chain commitment states, “To help define the parameters of the relationship, we have developed a comprehensive Supply Chain Social Responsibility initiative that underscores our belief that values define business relationships just as much as economic necessities do.” Similarly, Wal-Mart’s engagement policy is, “First, we will require these suppliers to demonstrate that their factories meet specific environmental, social and quality standards. Second, we will only work with suppliers who maintain our standards throughout our relationship. Third, we will favor — and in some cases even pay more — for suppliers that meet our standards and share our commitment to quality and sustainability.”
Competitive and industry activity
Finally, in addition to 3rd party survey data and clear communication from customers and prospects that green hotel options are sought after, the industry itself is sharing the business value they are reaping from their environmental programs. It is not often that companies tout programs to their competitors that are bringing them business. However, the motivations for this public display are obvious – the more attention they receive, the more these prospects and customers are aware of their actions, thereby directing more business their way. Again, clearly there are additional benefits from these eco programs such as doing the right thing, serving the community, connecting with employees, etc. Nonetheless, the sales and revenue opportunities from these programs should not be overlooked.
Mike Damion, the general manager of Kimpton Hotels and Restaurants’ new Hotel Monaco Hotel in Baltimore, highlighted the sales and revenue benefits they’ve seen in a July 2009 article in Hotel Online publication. Damion said, “We’ve done surveys and found 57 percent of our guests had a great concern for the environment, so this (environmental commitment) is something they sought.”
In a June 2009 interview with Starwood’s CEO, Frits van Paasschen, he said “When it comes right down to it, sustainability pays. And it pays in three ways: guests are increasingly interested, so it’s good for business; there are real opportunities to reduce costs and do things that are green at the same time; and something not everybody realizes, there is so much passion and energy within the organization to do this that the ability to get people excited about the company they’re a part of through the kinds of green practices we’ve been implementing is another source of success and payoff. ”
Lastly, in a June 2009 article in the Denver Business Journal, Jenni Gaherty, the Director of Sales and Marketing at the JW Marriott Denver at Cherry Creek, shared their data from this increasing demand and pressure from corporate travel and group business. She said, “75 percent of meeting planners ask about green initiatives when deciding where they want to have a gathering.”
Now that various case studies and data points are on the table, the question remains – does the above provide enough information to inspire action by all hotels? Isn’t it difficult to argue that having a green initiative is not only necessary, but actually essential to compete in today’s market when there are so many examples across so many stakeholder groups that speak directly to the business benefits around hotel environmental programs? If not, what data or information is missing to move sustainability forward across your hotel or hotels? And lastly, as if the benefits of capturing the revenue and business of the green-oriented traveler weren’t justification enough to take action, these green programs also create operational efficiencies, generate cost savings, attract, retain, and inspire employees, and create marketing and PR opportunities. Any questions?