Industry Update
Opinion Article 4 May 2016

Corporate Social Responsibility: Environmental Management and Sustainability Strategies for Hospitality Organisations

By Nicolas Frangos, Forward Thinking Hospitality Executive

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Aim and purpose

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This article aims to evaluate hospitality organisations and how they improve their responsibility of being environmentally sustainable. The report propose strategies, plans, processes and tools, to industry executives and all other stakeholders (employees, local communities, vendors, operators, owners, investors) to make decisions that have immediate impact to triple bottom line (economic, environmental, and socio-cultural sustainability). The following content has no other ambition than to focus on effective ways to ensure sustainable business environment, at corporate and operational level, for existing properties and new projects.

Executive Summary

The impact of the hospitality industry businesses on the environment is crucial and of vital importance. Therefore, a well-designed and implemented Corporate Social Responsibility (CSR) plan, aligned with values, vision and mission statements of the firm, is the foundation of an organization's further sustainable development, and has become a fundamental element of organisations corporate strategy. Efficient sustainable development plans can definitely improve a company's reputation, increase employees' moral, improve the bottom-line, and can lead organizations into more sustainable growth and prosperity. Initiating new business with companies that have positive CSR reputation may become a preference for many clients.

Environmental care, minimization of waste, conservation along with the use of sustainable practices (reduces, reuse, recycle) can bring significant cost reductions for organizations. Sustainable development strategies also concern the environment, and have to do with the company's capability to operate efficiently in the present without compromise its adeptness to operate efficiently in future. Most European governments and hospitality businesses have significantly embraced sustainable growth philosophy. Research made by the International Hotels Environment Initiative showed that 90% of UK citizens, 70% of Australian, and 30% of Americans accept that the hospitality industry in general has a negative impact on the environment. Societies, hospitality organizations, consumers, governmental agencies, construction companies, tour operators and other stakeholders, cooperate to resolve all environmental and social issues that have negative impact in the industry, using sustainable practices.

Corporate sustainability
External environment affecting an organization
Importance of external factors

The degree which a business can be able to meet its goals is determined, in a large part, by its external environment, outward milieu factors that are beyond an organization's immediate control. The inability of an organization to impact directly the effects of the external factors motivates the need for the adoption of strategies that will mitigate their effect in the long run. The stakeholders are one of the external factors that may impact the running of an organization. More often than not, when organizations fail to adhere to the set expectations of the stakeholders, there is a risk for the closure of the business operations. The most effective approach then entails ensuring that the management strategies that are implemented are well informed by the needs of the stakeholders.

The competitive environment is a critical feature of an organization's external factors, and has the potential of occasioning business failure. Such an impact is realized via the implementation of strategies that drastically impact an organization's market viability. Given the risk posed by the competitive environment, it becomes crucial to ensure that adequate regard is accorded to this threat. An awareness of the competitive environment will enable the management team to implement counter strategies.

PESTLE analysis is perhaps one of the most effective tools via which an analysis of the external environment can be undertaken. Using this analysis, it becomes plausible to analyze a firm's external environment. Such an analytical tool enables the management team to gain an awareness of the holistic environment in which a business operates. Therefore, in this way, the management team can be certain of their ability to factor in all critical information required to augment the quality of the sustainable practices, decisions that are employed.

Analysis of the needs and expectations of organization's stakeholders

In the business realm, the range of stakeholders can be quite varied. In a typical setting of an organization, may range from the customers, employees, local communities, members of the supply chain to the investors. The financial success of an organization is dependent on the degree to which the business is able to meet the needs and demands of all interested parties. Adequate regard has to be undertaken by the various mechanisms in operation in the corporation to ensure that no one stakeholder is neglected.

The interests of the various stakeholders are quite varied. With regard to the consumers, meeting the guests' perception of services is among the most critical of factors for an organization. The ability to meet this expectation will determine a firm's ability to hold on to a share of the consumer market. Meeting the set anticipations of consumers tends to fashion an environment that is enabling for customer loyalty.

The company's CSR strategy aligned with the needs of local societies and synergy between business and community, are additional main determinant factors of the financial success of the organization. Triple bottom line sustainable development is a critical component of the organizational process and it is at the core of company's daily operations. Its nature is such that all parties are required to ensure its success in the long run. Given the existence of variables, it becomes critical to ensure that all stakeholders operate in a manner that is conducive for the benefit of environmental, social and economic performance . The relationships can only be improved once the constituent parties are aware of the focus on realizing their demands and needs. The strategies for the external environment should then factor in the needs and demands of each of the players. Once the business strategies are aligned to meet the needs of society and the market, then the needs of the shareholders can easily be met.

In the contemporary hospitality industry world an increasing number of organizations have adopted a "triple-bottom-line" (social, environmental, financial) sustainability framework or otherwise called 3Ps (people, planet, profit) and went way beyond the conventional measures, of net operating profit (NOP), return on investment (ROI) and shareholder value (SV), focusing on their social, human and environmental capital.

Sustainable Hospitality

Sustainability in the hospitality industry includes decisions and behaviour of all stakeholders involved. This segment of the industry has been very active in the effort to learn and sustainable development needs to these efforts for executives in the industry. This ensures efforts on the commitment to the environment and socially responsible action that also focuses on economic advantages for the companies.

The AH&LA and USNRA conserve program provide guidelines to select and efficiently manage environment sustainable program, implement best practices and become an eco-friendly hospitality organization:

  1. As organisations going through the process of a program selection, there are a variety of certification and accreditation platforms to adopt, some are listed below:
  1. Audubon Green Leaf, Eco-Rating Program, is a cost effective five stages process where hospitality properties are awarded of one to five Green Leafs, based on their effectiveness on energy savings, waste recycle, water quality consumption minimization and conservation.
  2. Going Green platform is an International Tourism Partnership (ITP) program developed by the Prince of Wales Foundation. The plan helps hospitality operations to implement sustainable strategies by minimization of negative impacts on the ecosystem and increasing their positive effects to conservation of biodiversity. Going Green policies help organisations to be praiseworthy across the triple bottom line.
  3. Green Key Global Eco-Rating system is a progressed rating method intended to recognize Hotels & Resorts that are dedicated to improving their economic, social and environmental management and performance. The program is comprised of a self-directed inspection focused on operations and environmental procedures, combined with onsite checks to confirm a property's rating.
  4. Sustainable Tourism Eco-Certification Program (STEP), This is an all-embracing global sustainable certification program , offered by a non-profit organization and aligned with the minimum Global Sustainable Tourism Criteria (GSTC), and global recognition though the Sustainable Tourism Stewardship Council (STSC).
  5. TripAdvisor Green Leaders is one of the most recognized green Hotels & Resorts programs that directly review environmental sustainability, highlighting properties with green practices on TripAdvisor. Qualified Green Leaders are awarded a badge in search results, and their green practice will be showcased on their page. Properties attain an on-line evaluation, and depending on their scores are distinguished in bronze, silver, gold and platinum Green Leaders.
  1. Best Practices & Green Resources. The following is a range of innovative tools of going green, with a positive immediate impact on the triple bottom line:
  1. Energy Management & Efficiency
  1. Each hotel / property should create an environmental committee in charge of developing an environmental green plan.
  2. Use tools such as energy star portfolio manager to receive additional information on property's energy consumption.
  3. Use occupancy sensors, which turn heating, lighting, and cooling units on or off based on whether or not a guest is present in a room, can cut energy costs up to 50%, in meeting rooms and in back of house areas where possible, replace interior / exterior lamps with LED lamps wherever possible, install a reflective roof, solar lamps.
  • Disconnect not in use, computers, electronics, coffee machines, POS system, and all small appliances, lowering your thermostat 2 degrees in winter and raising it 2 degrees in summer can save 2,000 pounds of carbon emissions per year, according to stopgobalwarming.net.
  1. Use energy-saving window film in rooms, in public and back of the house spaces, stop air leaks by sealing and isolating around windows and doors that leak and installing energy curtains in freezer rooms.
  2. Install a reflective roof, use solar lamps, change the old vent hoods in the kitchen with new smart ones.

OHANA Waikiki Beachcomber, Honolulu Hawaii, USA

The hotel earned Energy Star certification by the U.S. Environmental Protection Agency (EPA), by replacing the property's original chillers with variable frequency drive ones, installing motion sensors to turn off back of the house areas lighting, replacing light bulbs with energy efficient bulbs T8, installing a PMS (property management system) for guestrooms air-conditioning. Implementing these techniques the property is using 40% less energy than other properties, reducing the carbon emissions and saving money releasing 35% less CO2, earning an additional

  1. Reduce waste – Reuse – Recycle
  1. Recording your hotel's solid waste data and instigate inspections on waist spending, implement waist-stream audits, control food waist (donations, composting), take away the trash habit and recycle, implement a guestroom and back of the house recycling program (and for resorts also front of the house, see Hilton's "go green" programs).
  2. Reusing furniture, recycled flooring and wood from sustainably managed forests, flooring recycling of paper, plastic, glass and aluminium.
  3. When renovating consider to include methods employing to recycle / reuse removed materials.
  4. Implement a refillable amenity dispenser, guestroom soap and amenity donation (see NY Marriott Marquis program), textile and mattress recycling programs, use bio-degradable hotel key cards.

Hotel Carlton San Francisco, USA

The property after broad renovation earned the Energy Star Award, the Green Business Award and LEED-EB Gold Certification by upgrading its recycling program, conserving water, initiating sustainable purchasing policy introducing green meeting programs, implementing staff efficient training programs, successfully reducing carbon emissions.

  1. Water Management & Recycle
  1. When purchasing laundry equipment, dishwashers, purchase appliances bearing the ENERGY STAR label accredited by the U.S EPA with an average of 40% more energy and water efficiency than standard versions, use spray-nozzles in the kitchen prep sinks that automatically stop to rinse dishes, do not thaw foods with running water over them, do not utilize potable water for cooling via a "once through" system for water-cooled icemakers and connect them to the chilled water system, when replace purchase new ones choose air cooled icemakers.
  2. Use laundry equipment with microprocessor controls and install an ozone system, check leaking valves and repair faucets, toilets that are leaking, install waterless urinals in employee and public restrooms.
  3. Control constantly irrigation systems (via rain gauge or soil moisture sensor), cooling towers, swimming pools installing sub water-line meters recording water usage in the areas, avoid to "water" parking lots and roads and use alternative rain gauge systems.
  4. For larger properties and hotel chains it is proposed to study the implementation of rain water harvesting systems, bio-retention basins, and green roofs.

Kalahari Resorts, Wisconsin & Ohio, USA

Both properties the 884 room hotel located in Ohio and the 740 hotel in Wisconsin installed the AquaRecycle system and earned the Clean Air Recognition Award by reusing 70% of their laundry water with substantial savings in costs in energy and wasted water. The properties are using HVAC EMS, dishwasher spray heads, and low flow showerheads. The Ohio hotel installed a transparent roof system permitting a natural to heat the indoor pools, also installed an Ozone system in the laundry areas which resulted to less chemical, energy and faster washing and drying. The Wisconsin property installed panel solar water system and an EMS for its guestrooms.

  1. Food and Beverages
  1. Embrace the local community and flavours, create property's organic vegetable garden and farm, and do not overuse food sources like seafood.
  2. Choose one topic theme per month, develop relationships with local purveyors and chefs, ask questions to your suppliers about where your ingredients come from, how they were grown, visit a farmer's place and spread the world with the valuable information you gained, it resonates with the future diners who are looking for environmental responsibility.

Fairmont Washington, DC, USA

The Hotel was the first of the chain as a part of its sustainability partnership program to respond to the US honey bee shortage welcomed 105.000 Italian honey bees to its green rooftop. The whole operation produced 100 pounds of honey the first year 2009, which is used to the culinary creations of the property. Implementing the program, the property contributed positively against the decrease of bee population size due to pollution and habitat loss, which has a negative impact in plants pollination. Without pollination for birds, animals and insects will be difficult to thrive as pollution and deforestation advance. Fairmont has now 8 hotels globally with more than 20 honeybee apiaries, and plans for further expansion.

  1. Education – Benchmarking – Training - Certification
  1. Implement the methodology of Hotel Carbon Measurement Initiative (HCMI), a Joint project between International Tourism Partnership (ITP) and the World Travel and Tourism Council (WTTC) along with 20 hotel companies and the support of KPMG as consultants have developed a common technique for checking carbon footprint.
  2. Choose and implement a certification program amongst several reliable that meets your needs: Audubon Grenn Leaf – Eco-Rating Program, Going Green, Green Key Eco-rating Program, Earth Check, Green Globes, Green Seal, EcoRooms & EcoSuites, Sustainable Tourism Eco-Certification Program (STEP), US Green Building Council, and Green Restaurants Certification GRA's Green Restaurant 4.0.
  3. Implement a purchasing plan considering life cycle costs and testing eco-friendly products and services.
  4. Consider to developing and operating green buildings, the US Green Buildings Council has established the LEED (Leadership in Environment and Energy Design) with ratings and standards. Green building program standards advice to use low-VOC's (volatile organic compounds) or no VOC paint, non-toxic, low biocide and natural coatings
  5. Use the EPA water sense and waste wise programs to reduce usage of water and solid waste
  6. Build air quality program to deal with mold and mildew problems, and provide indoor air quality, the ASHRAE (American Society of Heating Refrigerating and Air Conditioning Engineers) has a number of publications and standards dealing with indoor air quality.
  7. Minimize the use of chemical pesticides by Implementing and performing an Integrated Pest Management plan
  8. Communicate, inform your clients about your energy, reduce waist-reuse-recycle water, and education-training efforts, and Certifications.

Hyatt Place Wyoming Michigan, USA

The Hyatt Place was the first LEED Hyatt build property in Michigan, and offers its services to hotel guests with many LEED related characteristics: recycle leftover bathroom amenities after a guest is check out, the hotel then converts the remained items into laundry detergents which are used to wash and soften the property's linens, installed in guestroom motion detectors to control lights and heating, use of green cleaning compounds.

(Source: American Hotel & Lodging Association – AH&LA, US National Restaurants Association USNRA)

CSR in International Hotel Chains

  1. Fairmont – Raffles - Swissotel

Company's "Sustainability Partnership Program" is aligned with its mission, vision and priorities (responsible business, ecosystem, environment, engagement). According to organisation mission and principles, the management enhance the genuine experience of guests and staff and promote a diverse cultural exchange within the communities they operate to ensure that positive benefits occur. Their vision is to promote long term sustainability, investing in the positive development of employees, guests and destinations. Their priorities are to conduct their business with integrity, initiating and integrating sustainable innovative practices across their operations around the world, supporting all stakeholders and enhancing the well- being of local communities. Fairmont is well aware of the operation impacts associated with the environment and is introducing sustainably best practices to reduce carbon emissions and help reduce the effects of global warming.

Fairmont's recent actions contain the "Environment Pillar" Project with in property "Sustainability Teams", in charge of executing the sustainability partnership program, benchmarking and overseeing all department operations incorporating company's environmental commitments, recording, setting targets, training colleagues and providing the necessary materials to stakeholders. The "Charitable program" is in partnership with global organisations: WWF Climate Savers Program, The International Tourism Partnership, and The Sustainable Travel Leadership Network, engaging and supporting stakeholders impacted by Fairmont's operations and focusing their efforts on local and global issues reflecting organization's culture and sustainable mission. In addition to financial support, properties' teams partnering with local charities voluntarily helping local communities, demonstrating the utmost respect for people and cultures. The company focuses on two major charitable axes: a) fresh water access, watershed protection, and conservation, b) local job growth, education, health, local business support, poverty and hunger relief.

  1. Accor Hotels

Accor is one of the first hospitality organisations to encompass corporate sustainability. Company's charity emphases on child sponsorship and aid to local communities whilst its sustainable development contains architectural integration and biodiversity. Its program started as an eco-friendly strategy in 1997, and formally became company's development strategy in 2004. That plan contains a scorecard that checks Accor's involvement throughout all properties globally with all stakeholders. It encourages engagements by all its employees through the conception that "one employee can make a difference." The organisation published a short document highlighting ecological tips, a graphic novel on environment protection, and a guide for hotel managers to train their employees on environmental conservation. One of company's best known actions is "Plant for the Planet, Billion Tree Campaign".

  1. Marriott Hotels & Resorts

Marriott is another example of early embracing sustainability practices and reports "investing in sustainable development and innovative conservation initiatives [. . .] that will provide long term solutions to critical social and environmental issues".

The company in its annual report 2015 provide environmental performance indicators globally, reporting that their environmental strategy improves, build more sustainable hotels, energy efficiency, their current projects reduce gas emissions and conserve water. Marriott is working in partnership with local communities and groups, non-governmental organisations and governments on a variety of conservation initiatives, and emphasises on its enduring relationship with international aid agencies. The organisation is designing and implementing procurement criteria for the greening of FF&E (furniture, fixtures and fittings), working with contractors, suppliers to further develop the sustainability of their products to increase waste diversion, reduce water use and recycle and to embrace more sustainable practices and use eco-friendly materials. As a result Marriott uses in its properties recycled content key cards, coreless toilet paper, low WOC paint, eco-smart pillows, biodegradable laundry bags and save energy light bulbs. In their program "Sustainability in Our Kitchens" management teams establishing relationships with local farmers purchasing organic and responsibly sourced food products. Company's "Spirit to serve our communities" plan focuses on its efforts to address housing and hunger needs, and most particular in times of disaster aiding sick and impoverished children. Also Marriott donates every year more than $25m to international organisations, and its employees further raising $5m per year and volunteer more than 450.000 hours to support local communities.

Other hotel operators have extended their CSR activities beyond traditional sustainable practices: volunteer guests supporting local communities (e.g., Ritz Carlton "give back getaways"), educating and serving healthy foods to children (e.g., "nutritional balance program" Novotel France), (e.g., "KIDS" charities Hilton International), charity funds raised by properties' employees (e.g., "The fantastic match" Mandarin Oriental"), children and elder special care program by employees (e.g., "Not to forget the elderly", "Partnering for a better life for children", Peninsula Hotels).

Hilton Corporation has been named one of the most comprehensive in CSR, Marriot came as the second most complete and the hotel group Accor was third. (Holcomb, Upchurch & Okukmus, 2007) suggested that most hotel chains can improve their CSR reporting and the hotel corporations have to "live up to its reputation as ""welcoming" not only for their customers but also for society. Best Western, Hilton Group, Accor, Intercontinental and Six Senses has; however, budgeted more than $ 2,5 million and other chains also commit provided assistance.

Conclusion

This article attempted to provide a solid basis for sustainable business initiatives and solutions, giving examples of some of best hospitality establishments. All discussed companies in their programs and features embrace the triple bottom line (social, environmental, economic) approach in order to design and implement their sustainability strategies. Organisations operating in the industry tend to engage in somewhat the same activities. However, differences may be occasioned by the initiatives endeavoured at creating an avenue for product and service differentiation.

A comparative analysis of the activities will reveal that the differences are quite trivial in the short-run. However, in the long-run such differences become core determinants in dictating the relative business performance, and lead to a long strategic position at all levels. Such a differentiating and a long term investment factor for hospitality organizations is a well-structured and executed CSR policy. To sustain competiveness and also be a leader in the market it is required to seek and apply contemporary and creative sustainable solutions, beyond conventional methods such as energy saving, water recycling and donations.

Future researchers might focus on key strategic drivers towards sustainable development and provide employees, managers, suppliers, operators, owners, investors with transformative, smarter solutions and tools. The future of the hospitality industry is in sustainable focused best practices, diversification of products and services, the mission statement of businesses : quality overpasses quantity at all time, and continue building not only physical assets, but at the same time intangible assets, with immediate impact in the environment, local communities, sales, market share and profit.

Nicolas Frangos

Nicolas Frangos is a multi-skilled Hospitality Executive with distinctive knowledge of Luxury Hotel Operations, Development and Asset Management, directing international hotel groups, mixed-use business, multi-unit properties and outstanding luxurious hotels, introducing strategies to drive growth within intensively competitive markets, delivering significant return on equity and invested capitals (ROIC).

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