How Hotels Balance Profitability and Sustainability…The Key To Matching Go-Green Goals with Investor Expectations!

Concern for our environment and planet have been top-of-mind for many years. Even with the launch of Earth Day back in 1970, sustainability began as a luxury for hotels and businesses but not quite a necessity. Fast forwarding today, sustainability has become an important focus and a necessity for many businesses and consumers, including hotel guests deciding what hotel they will book. Wellness for guests is another focus for hotels these days. But “hotel wellness” is just as important for the environment. Sweden’s teen activist Greta Thunberg’s call for action on climate change has helped put sustainability in sharper focus for everyone, including hospitality investors. 

Large hospitality groups continue promoting their sustainability programs such as: Marriott’s Serve 360 program, Hilton’s Lightstay platform and Accor’s Planet 21 program.

Photo Credit: Hilton Newsroom

LightStay is Hilton Worldwide’s proprietary corporate responsibility performance measurement platform. It was developed to calculate and analyze the environmental and societal impact of every Hilton Worldwide branded hotel in their communities. The platform measures energy use, water use, waste output, and carbon output at every Hilton Worldwide hotel around the globe.

Each Hilton hotel is required to track and complete improvement projects throughout the year. The LightStay environmental and energy management system simplifies energy, water, and waste performance into simple scores, and also provides information on trending and benchmarking. The tool allows hotels to track their goals and progress against those goals. Although it makes complex calculations in the background, LightStay’s simplified user interface makes it accessible to team members.

The platform measures across more than 200 building and operating sustainability best practices. It manages energy and water modeling for every hotel, and calculates energy, water, and waste efficiency performance. LightStay is available on laptops and mobile devices and can aggregate data and share insights from more than 4,800 energy efficiency projects.

The platform has helped Hilton Worldwide aggregate information across more than 4,600 hotels in 102 countries. LightStay has allowed every Hilton hotel to be certified to the ISO 14001 environmental management standard and the ISO 50001 energy management standard. In the six years since LightStay was initially launched as a brand standard, Hilton Worldwide has reduced energy consumption by 14.5%, water consumption by 14.1%, and waste output by 27.6%. LightStay has also allowed Hilton Worldwide to save $550 million during that time.

Hotel sustainability goals are encouraged by customer demand and to reduce some of their operational costs. “Kike Sarasola, Founder of Room Mate Hotels, made this point at the International Hotel Investment Forum (IHIF) in Berlin last March. He argued hotel groups need to take more significant initiatives than token ones such as banning plastic straws. He noted long gone are the days when asking guests to reuse their bathroom towels was enough—and was it ever?”

But we can note some great efforts from programs in the past such as The W Hotels bed linen program in North America. They launched a new range of bed linens made from recycled plastic bottles. Early May saw the hotel launch the Ekocycle range of bedlinen, designed in a partnership between Will.i.am from the Black-Eyed Peas, and Coca Cola. Each king size Ekocycle sheet contains around 31 recycled 600ml plastic bottles. It’s an excellent example of making sustainability seem cool while designing waste out of a system.

Photo Credit: World Travel Market

Or Radisson Blu, previously launched a towel reuse campaign with water charity “Just a Drop.” For every 250 towels that guests reuse, the hotel chain will donate enough money to Just a Drop to provide clean water for a child for life. Guests will learn how many children were provided with drinking water through the hotel’s in bathroom cards, with Radisson Blu hoping to ensure 12,000 children have access to fresh drinking water each year.

But the bottom-line for hotels is a consistent, cost-effective sustainability policy that encompasses the complete operational strategy including all facets of the hotel from paper straws to recycled fabrics for the staff uniforms. Check out our GO-GREEN HOTELS Resource Guide by The Refinishing Touch®. It reviews many areas of hotel operations and provides ways to incorporate more sustainable measures throughout the property.

During the IHIF meetings, many CEOs supported a longer-term sustainability approach to become more prevalent in the industry–something the larger hospitality groups may struggle with as their shareholders or private-equity owners focus on year-over-year results. Smaller hotel operators may have an easier implementation for incorporating sustainability into their overall operations and make it a differentiator that will help reach their target audience.

CEO of International Campus Rainer Nonnengässer, Room Mate Hotels Founder Kike Sarasola and A&O Hostels Founder Oliver Winter discuss sustainability at IHIF. Photo credit: Mark Green

When an operation review is in motion, that is the time to take an in-depth look at sustainability improvements and make recommendations for an existing hotel. That includes the largest asset which is the hotel FF&E. What is the condition of the guestrooms, the furniture, the bathrooms, the public spaces? It is easier with new construction because sustainability begins with the design specification process.

Photo Credit: The Refinishing Touch®

For existing hotels that need to review their sustainability and balance their profitability, it occurs generally when a hotel is experiencing a PIP, CAPEX or rebranding renovation process. Let’s talk about real costs when it includes the hotel FF&E. Upon a closer look at the REAL costs for a U.S. average-sized hotel, in 2017, according to Smith Travel Research (STR), FF&E costs averaged $10,000 per room per year. Not addressing the obvious FF&E wear and tear issues for a moment, if just one-half of one percent of those rented rooms had a “serious” maintenance-related failure, approximately 139 room nights per year would be detrimentally impacted! With an average-sized 115 room hotel, if those rooms were out of service for just one day, using 2017’s average room rate of $127 per night, the hotel could face $17,653 in lost revenue. If a room is out of order for more than one day, that lost revenue figure quickly grows higher.” During a renovation, The Refinishing Touch® understands the critical importance of getting rooms back into service, as soon as possible, for your guests. With our on-site refinishing, we’re able to return hotel rooms back for occupancy that same day saving tremendous amounts of money with no downtime!

Photo Credit: The Refinishing Touch®

At an event in London in April, Portugal’s Minister of Tourism Ana Mendes Godinho explained how her government is setting up environmental goals for its hotel sector, supported by financial instruments, regulation and encouraging links with relevant technology companies. What is clear is the hospitality industry needs support to work toward clear and effective sustainability objectives. Lacking clear and consistent support, it is often down to individual companies to design their own sustainability programs, which may vary considerably and may only be affordable for luxury properties.

This month at the IHIF Advisory Board meeting, private-equity firms stated that sustainability is increasingly being taken into account by investment committees. Included in operational and real estate reports, a considerable number remain skeptical about the investors’ intentions. “As much as sustainability is accepted as a goal to satisfy consumer demands, the main concern remains the impact it will have on profitability. At the development stage, investors and developers are not likely to be paying more for an environmentally friendly building; at most an investor may go for an environmental certification—but not to the highest level. The main idea is: “What is the minimum we can do to be perceived as being sustainable without adding costs?”

But when you look at the incredible environmental impact just one hotel can make in a community, it is not difficult to consider implementing sustainable measures that benefit the guests, the community and the employees and their families. For example, look at the incredible CO2 impact that a 100-room hotel can make by simply refinishing the FF&E and not replacing it. Choosing between adding over 125 tons of CO2 into the environment versus adding a little over 1 ton of CO2…seems like an easy decision when it comes to helping the environment and the community for the hotel.

Photo Credit: The Refinishing Touch®

For hoteliers, it is quite the balancing act of passing PIP inspections, keeping rooms refreshed, creating loyalty with great amenities and rewards, developing social experiences within the hotel, all while maintaining functional, efficient operating systems and providing a great work environment for employees who will always treat guests well and look forward to being of service and…be a profitable and sustainable hotel.

At The Refinishing Touch®, we can help provide the sustainable FF&E Solutions whether it requires refinishing, re-engineering or reupholstering. All work is done on-site and is clean and non-toxic. For over 41 years and 7,000 completed projects nationwide, we have been helping hotels manage assets and stay compliant with their brand standards with our sustainable solutions.

Photo Credit: The Refinishing Touch®

We are a trusted and Preferred Supplier for Hilton and Host Hotels and Resorts and many more.

If your hotel FF&E needs updating and refreshing, keep it simple and simply refinish it, don’t replace it. Call us today at 1.800.523.9448 and talk with our team about all of your sustainable options for your renovation project. Email [email protected] for your online quote. We invite you to learn more at www.therefinishingtouch.com .

RESOURCES:

Five steps to a successful towel and linen reuse scheme, by Jeremy Smith, Carbon & Water, Responsible Tourism Blog

Hilton shows small actions add up to a big responsible business by Siobhan O’Neill, Green Hotelier.org

Hotel investors look to balance sustainability, profitability, by Julie Rey-Gore, Hotel Management Magazine

Hilton Worldwide: LightStay; Environmentalleader.com; News and Best Practices for Commercial & Industrial Environmental Professionals