A Hotel Under Water? Hilton Worldwide
The Hospitality Industry
It is November at the capital of capitalism and many of Harvard Business School’s ambitious first-year MBA candidates are gearing up for the annual “RC Ski Trip”. Keystone, Colorado will welcome a plethora of tourists; and its local economy, particularly the hospitality industry, will benefit greatly. However, many of the world’s largest hotel chains are asking themselves: as sea levels rise, snowfall declines and coral reefs fall apart, how will we survive in certain cities, regions and countries driven by tourism?
Tourism and the hospitality industry have been important aspects in the economic development of many regions in the world. In the 1970s, cheap flights and mass tourism incentivized developers to flock, build and collect as quickly as possible. Unfortunately, hotels and resorts were not built with green initiatives in mind. Additionally, once built, many hospitality operation practices did not include water, waste or energy reduction programs. It is estimated that water can account for up to ten percent of a hotel’s total utility bill, the average hotel guest produces more than one kilogram of waste per day and hotels emit an average of 20.6 kg of carbon dioxide per night. With statics such as these, how can the hospitality industry add the environment and climate to its bottom line? Let us examine Hilton Worldwide.[1][6]
Hilton Worldwide
Hilton Worldwide collected roughly 11.27 billion U.S dollars in revenue in 2015. This figure only trails InterContinental Hotel Group and Marriott International. Hilton Worldwide operates 737,922 rooms in 4,480 hotels. The company operates hotels in many of the world’s most tourism dependent countries.[3][7]
[2]
How Will Climate Change Impacts Hilton Worldwide
Climate change will have a direct negative impact on many vacation locations were Hilton Worldwide has numerous hotels. For example, as temperatures rise in the Caribbean, tourist arrivals decrease. Examining this further reveals the low-impact scenario of rising temperatures in the Caribbean results in a loss of $715 million dollars in tourist expenditure. The high-impact scenario results in a loss of $1,430 million dollars in tourist revenue. It is evident that Hilton Worldwide and the border hospitality industry will be greatly impacted by climate change prompting hotel closings and decreased profits. So what steps have Hilton Worldwide taken to ensure tourism and profits do not decline while contributing to solve climate change? [5]
Hilton Worldwide’s Response
Through innovative partnerships and initiating operational initiatives the company’s response is improving the environment and conserving resources. Examples of their actions to date include:
- Becoming the first global hospitality company to be certified ISO 50001 for Energy Management, ISO 14001 for Environmental Management and 9001 for Quality Management.[4]
- Installing Vehicle Recharging Stations:
Four Hampton by Hilton hotels in Albany, N.Y partnered with General Electric and SkyChargers to install electric vehicle recharging stations on their properties. Travelers can reduce their carbon impact by renting an electric vehicle and then recharge it using the SkyCharger station at the hotel.[4]
- Raising Awareness of Waste and Nutrition:
Hilton Amsterdam partners with GRO-Holland to collect coffee grounds to use as a base to grow mushrooms. The mushrooms are then processed into vegetarian food items that will be sold in the hotel. The hotel has researched the positive environmental effects of Vegetarianism and how it significantly cuts our dietary carbon footprint. Hilton Amsterdam’s goal is to raise awareness and educate the community on waste reduction and alternative diet options that benefit the environment.[4]
- Recycling Food Waste into Fertilizer:
Hilton Foshan volunteers time to collect and pack coffee waste generated by the hotel every day. Once collected they will use these coffee grounds to remove humidity and improve the air quality in rooms by creating an organic plant fertilizer. The hotel is also packing coffee for the local community, schools, landscaping units and farms to use as fertilizer.[4]
What More Can Be Done
Although Hilton Worldwide programs have done a tremendous job thus far, more can be achieved. A few recommendations I believe the organization should consider include:
- Adopting a towel and linen reuse program for every hotel. Studies have revealed that programs such as these can save up to 6,000 gallons of water every month at a 150-room hotel.[1]
- Increasing the use of renewable energy.
While I understand these recommendations cannot be easily implemented and will require support from executives and employees alike, we have to ask ourselves what type of world do we want to leave for our children and grandchildren?
Kevin-
Thanks for sharing this information on Hilton and how they (and the hospitality industry more broadly) will be impacted by climate change. I think this is a really interesting space — a couple of direct reactions to your points:
1. I was interested in understanding ISO 50001, 14001 and 9001 and actually found them to be very useful frameworks for companies looking to better manage energy, reduce environmental impact and provide high quality products and services for their customers. Most interestingly, they all adhere to the principle of continuous improvement, much like the Toyota Production System. The frameworks encourage companies to plan for better energy, environmental and quality management, act, learn and refine. I appreciate this type of operating model, as it emphasizes action over inaction and ensures that companies start taking steps forward, even if they’re small ones.
2. The idea of installing vehicle recharging stations is a really interesting one. While small in scale at the moment, I could see this becoming a wider industry practice. Moreover, I wonder if Hilton could potentially create an additional revenue stream by maintaining and renting out a fleet of electric vehicles. It would be perfect for individuals travelling who need a rental car to explore new areas and would be a great way of helping reduce the overall impact their guests have on the environment.
3. The partnership with GRO-Holland in collecting coffee grounds and growing mushrooms is also an interesting one. Do you think there’s an opportunity to reuse their own coffee grounds and other waste from their current kitchen operations to fuel farming practices at the hotels? I wonder if there is a way for the hotels to become more self-sustaining and do away with external partnerships, to some degree. This would be similar to what they’re doing now with creating fertilizer from coffee grounds to improve air quality.
In terms of what more can be done, I agree that an expanded environmental education program would help. Partnered with incentives that guests care about, like additional Hilton Honors points for guests who reuse linens instead of requesting a maid, Hilton can really move the dial on the amount of water they use everyday. To your initial point about losing tourism in areas of the world that are getting hotter, one adaptive technique Hilton can use to support their business is educating consumers on “new” or “trendy” vacation locales to “redirect” tourism to properties that may have seen less demand in the past.
I found this post really interesting, especially how hotels are sometimes contributors to the very issue that is negatively impacting their business and profitability. As such, it is overly important for them to take on initiatives that help mitigate the problem, since they have a more direct stake in it in terms of the viability of their company. What I found most interesting is that Hilton hasn’t done the two things you suggest they do – which to me seems more organic and/or controllable with respect to their business. It seems like the towel reuse program and working towards making their facilities more energy-friendly would be obvious starting points for the company.
Considering the amount of resources that go into making a hotel stay comfortable, I feel like Hilton should be able to do more than just collect coffee grounds… Totally agree with you regarding the towel reuse policy, but I think they can do even more! What about measures like more water efficient showers / toilets? Or let’s lose the minibars – having to restock miniature, inefficiently packaged items in the minibar everyday is totally inefficient (and overpriced). Depending on the city, maybe instead of extensive parking options they offer bicycles for visitors to borrow? The challenge will be to make these services fit into their luxury home-away-from-home experience. But nobody drinks wine out of 3oz bottles, so that shouldn’t be too hard.
Kevin – Thank you for sharing this post.
It is interesting to see how hotels are adapting to face climate change. I think Hotel buildings and resorts can go even further by partnering up with solar technology companies and using solar as a preferred source of energy for buildings. Since solar technology has become more economical due to technological advancements, it can also directly impact the hotel chain’s bottom line.
Thanks for the interesting read. The hotel industry is in an interesting position because they are uniquely positioned to be highly harmed by global warming, but they create a very small portion of the problem. Along with improving their own environmental performance they should work on becoming political active so that the government and other agencies can help to reduce other sources of global emissions. Being politically active on climate change would also provide good press for Hilton and help with the branding of the hotel.
Great post, Kevin! It was interesting to read about the sustainability initiatives that Hilton has put in place. While some of the low hanging fruit such as towel reuse and increasing use of renewables can generate cost savings for the company, I believe that climate change offers a unique opportunity for hotel chains to build market share through product differentiation. Specifically, hotels that focus on eliminating waste and implementing sustainable practices can brand themselves as “eco-friendly.” This can attract affluent consumers willing to pay extra for a night’s stay at a sustainable hotel. Not only does this allow hotels to build share, but they can also foster brand loyalty with customers who “identify” with this type of lifestyle hotel.
I would encourage you to read up on a company called 1 Hotels that has a unique vision of bringing sustainability to luxury hotels:
https://www.1hotels.com/our-story
http://www.usatoday.com/story/travel/hotels/2015/08/05/1-hotels-central-park-new-york-barry-sternlicht/31073943/
There are also a few other hotels that focus on eco-friendly initiatives. This article from Forbes describes some of the sub-brands within some of the major chains that have environmentally friendly hotels: http://www.forbes.com/sites/eco-nomics/2011/04/18/5-green-hotels-for-business-travelers/#7e5b022a1d84
Thanks Kevin! Loved to read about the growing awareness of sustainability in hospitality and on how hotels are increasingly focusing on driving stakeholder engagement – guests, employees, suppliers, owners, franchisees – in this controversial space.
What strikes me the most is that these topics have recently been moving up on the agenda and are becoming more strategic and innovative – industry leaders had kicked off efforts 4-5 years ago. The focus then was on tactical changes such as rethinking housekeeping carts to enable more efficient disposable of guests’ trash. Today, leaders are looking at how to strategically decrease energy consumption through partnerships with innovators such as Siemens or Kiwi Power. Hotels are also considering supply chain collaborations with suppliers, focusing on water scarcity and cotton farming. Their goal is to ensure that all of their suppliers share the same business practices and values.
Hospitality is an incredibly difficult industry to improve in regards to climate change due to the sensitively tailored approach required at each destination in the guest’s journey. Nonetheless, sustainability is exciting for Hilton as it creates an opportunity to engage the public and welcome a whole new audience into their properties. Don’t know about you but I’d like to see self-sustaining properties being built in the future, producing enough energy to export for local consumption! Also, employees need to be involved from the very start and should be empowered to shape tomorrow’s best practices. As Marriott’s philosophy suggests: “Take care of our associates and they will take care of the customers”. [1]
[1] Marriott.com