MARRIOTT INTERNATIONAL: NO RESERVATIONS ABOUT CLIMATE CHANGE
“We welcome the tremendous responsibility as the world’s largest hotel company to be a good global steward.” –Bill Marriott, Founder and Chairman of the Board
Image: Marriott’s carbon footprint (i)
Background
It’s March 25, 2016 and Bill Marriott, Founder and Chairman of the Board of Marriott International, has just received a phone call from his CEO, Arne Sorenson. “The deal is done. We are now the largest hotel company in the world,” Sorenson proclaims. To which Marriott replies, “Let’s get to work!” Part of that work will be integrating a corporate sustainability plan that has been in the works since 2007. Encouraged by public and private organizations, investors, and customers, Marriott has established itself as a champion of change when it comes to climate change.[i]
The Marriott/Starwood merger of 2016 formed the largest hotel company in the world. With 5,700 properties, 1.1 million rooms, 30 brands, in 110 countries, Marriott International is one of the world’s largest controllers of real property, managing an estimated $363 billion of real estate world wide. Buildings alone responsible for 6.4% of direct GHG emissions and 12% of indirect CO2 emissions worldwide.[ii] As one of the largest managers of real estate in the world, Marriott is in a position to have a significant impact on the world’s climate change problem.
Motivation to Change
Government treaties and public policy have motivated Marriott’s climate change initiative. The Koyoto Protocol, a global treaty agreed to in 1997, served as a global baseline for mitigation of greenhouse gas emissions across the world.[iii] Four years later, President Barack Obama issued the American Clean Energy and Security Act.ii The bill, a variant of an emissions trading plan like that adopted by the EU, was approved by the House of Representatives but was never approved by the Senate.ii
Non-Governmental Organizations (NGO’s), particularly Carbon Disclosure Project (CDP), play a major part in Marriott’s sustainability mission. Marriott engaged CDP to help it calculate an annual rating based on sustainability metrics including carbon emissions.viii The rating, which sits alongside its stock ticker on Google and Bloomberg terminals, is used by many investment companies, including BlackRock, to evaluate risks and mitigation of risks related to climate change.viii The company is also required by large customers to provide significant amounts of data including the carbon footprint of their hotel stays to the impact of the meetings they hold at the hotel.viii
Marriott is also motivated to receive awards and recognitions as a top-ranked company to work for. For example, Forbes requires the company to provide a CDP sustainability rating to receive its “100 Best Companies to Work For” award.ii Deborah Marriott, a member of the Board of Directors at Marriott International stated, “It is imperative that we focus on our sustainability efforts in order to make it on these lists year after year.”
New Initiatives
In 2007, the company began to institute new initiatives to help achieve its goals. Marriott installed motion sensor lights and fluorescent light bulbs to help save on energy. It began offering guests rewards points for skipping housekeeping services and encouraged guests to use their bath towels more than once, drastically cutting down on laundry. Installation of 400,000 new environmentally friendly shower-heads and toilets has also helped contribute to the decrease in water consumption.[iv] There are further plans to retrofit older buildings to be more energy efficient, install electric car parking stations, and encourage owners to construct LEED certified buildings[v][vi].
A compelling indication that Marriott leadership is seeking transformational change to reduce its impact on climate change is its monetary bonus structure for employees with direct control over the performance of these initiatives. The Corporate Executive Team, VP’s of Engineering, Energy Managers, Environmental/Sustainability Mangers, Public Affairs Managers, and Facility Managers, are all offered monetary bonuses based on performance[vii].
Results
In less than ten years, Marriott International has successfully cut its energy and water consumption by 13.2% and 10.4% respectively.i This has resulted in a 13.2% decrease in the company’s total GHG Emissions- approaching its 2020 goal of a 20% decrease in global emissions[viii]. Marriott will continue to put forth new initiatives as it leads the travel and tourism industry in the fight against climate change.
As the behemoth takes its seat on the throne as the largest hotel company in the world, there is no reason why it must have any sustainability program at all. The company’s size gives it the ability to dictate the rules to its customers, investors, and private organizations like Forbes. Instead, Marriott has fully committed to a strong sustainability program, with a goal to do everything in its power to reduce its carbon footprint. All of which is an effort to truly become, as Mr. Marriott stated himself, “a good global steward.”i
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NOTES
[i] Marriott, Deborah (Member of the Board of Directors, Marriott). Personal Interview. 31 October 2016.
[ii] Peters, P. “The Impact of Tourism on Climate Change,” Centre of Sustainable Transport, NHV University for Applied Sciences, http://www.eldis.org/go/home&id=43261&type=Document#.WBlGAZMrLdc.
[iii] “Koyoto Protocol Fast Facts.”http://www.cnn.com/2013/07/26/world/kyoto-protocol-fast-facts/. Accessed 2 Nov 2016.
[iv] Butler, Jim. “The compelling “hard case” for “green” hotel development.” Cornell Hospitality Quarterly 49.3 (2008): 234-244.
[v] Harrison, Ron (Global Officer Architecture and Design, Marriott International). Personal Interview. 1 Nov 2016.
[vi] International Tourism Partnership. “Climate Change and the Hotel Industry.” 3 Dec 2015, http://tourismpartnership.org/news/climate-change-and-the-hotel-industry/. Accessed 2 Nov 2016.
[vii] CDP 2016 Climate Change Information. Marriott International Report. http://www.marriott.com/Multimedia/PDF/CorporateResponsibility/2016_Reports/ProgrammeResponseClimate%20Change%202016.pdf. Accessed 2 Nov 2016.
[viii] Snyder, Mari (VP, Social Responsibility for Marriott), Personal Interview, 2 Nov 2016.
This blog post adds great context and insight into Marriott International, how they think about climate change and some of the levers that they are pulling to combat it. Thanks, Craig!
From reading your post, I wonder if Marriott should be putting more pressure on those in their supply chain and partners that they work with to improve their sustainability efforts, as well as making the improvements in-house that they are, as the joint impact of the two initiatives would be significant. I think of Walmart when I read your post. Walmart is similar in the sense that it is the dominant player in its industry, has many, large locations that it is operating 24 hours a day and interacts with many other entities in order to remain a going concern.
In my mind, Walmart has set an impressive precedent for how large corporations should deal with their supply chains and partners to improve sustainability across the board, as Walmart says, “Although primary responsibility for compliance with Walmart’s Standards for Suppliers rests with the supplier, one way in which we drive a responsible supply chain is by identifying areas where Walmart can leverage its size and influence to assist its suppliers in making a positive and lasting impact on the people and communities from which they source.” (http://corporate.walmart.com/sourcing/promotingresponsibility)
Marriott is in the fortunate position to be able to “force” a change in its suppliers due to its sheer size and, as a bystander, I think that is something that they should do. If they announced that they were only going to accept detergent for their kitchens with no palm oil and made from sustainable sources, the positive impact that that would have further down the supply chain would be huge, it would force their suppliers to figure out how to source their raw materials sustainably or Marriott would switch suppliers.
Whilst I agree with Walmart’s statement that the onus should be on the suppliers to be making positive changes in their own internal processes, with great power comes great responsibility, and as the world’s largest hotel chain, I think that Marriott has a corporate responsibility to do the right thing and to force a change not only internally but with their external partners as well.
Very engaging piece, Craig! It’s incredible that Marriott’s sustainability ranking is such a highly visible metric for the company and investors. One thing that is so striking about the hotel industry is how small the steps can be to create such as huge environmental impact. Unlike some of these other companies that need to significantly invest in their supply chain or re-engineer materials for their products, Marriott can simply offer incentives for guests to re-use their towels, install light-sensors, and retrofit new shower heads.
Given the relative ease of implementing sustainability measures, I think that it’s critical that the hotel industry do even more. First, I hope that Marriott serves as an example for other hotel chains to adopt similar (or better!) practices. Second, I think that Marriott can implement more simple measures, which employees can contribute. One idea is for the hotel to provide guests with coffee mugs to be reused, rather than the disposable paper cups. Third, in addition to LEED certification, Marriott should incorporate sustainable construction practices when doing restoration or building new properties.
I would be very interested to see how much the company has had to invest upfront in order to make these changes and successfully cut its water and energy consumption in recent years. Because of its size and position in the market, Marriot has the unique ability and financial means to make this upfront investment that other smaller players in the industry cannot make. Intuitively, it seems that this investment will lead to greater efficiencies and improved profits in the long run and demonstrating these gains not only in terms of environmental performance but tangible financial gains would be one way to encourage a more widespread adoption of these practices. However, competitors simply may not have the means to make this investment which leads me to reserve judgement.
Additionally, I would like to know if these improvements have had a positive influence on the company’s brand in the mind of consumers. Assuming prices and locations are relatively close, do consumers value staying at a more environmentally friendly hotel? I would like to see the result of the rewards program as I find it fascinating to see if people are positively influenced environmentally conscious initiatives. Many of the inefficiencies have to do with consumer behavior and if they cannot be incentivized to change, there will be a ceiling on the progress Marriott can make.
Craig, interesting and well-researched perspective on Marriot’s present and future. I wonder, though, about your observation in the last paragraph – “As the behemoth takes its seat on the throne as the largest hotel company in the world, there is no reason why it must have any sustainability program at all.” On one hand, I think you’re correct in the existential sense. But I’m a bit skeptical that this is entirely altruistic. You mentioned that this highly visible program is important to attract talent (Forbes rating), signal to the market long-term viability (stock ticker rating), and reduce operating costs (water and energy consumption). I actually don’t think it’s a bad thing if Marriot’s environmental initiative is market-driven rather than internal – it could be a signal that companies are being rewarded for being socially responsible, which feels like a more powerful, more reliable and longer-term solution than a single board of directors deciding to prioritize this objective. Given your research in the area, I wonder what your perspective on this might be.
Great article CB
As the largest hotel company in the world, Marriott is in a unique position to have a significant impact on Global Climate change. However, as you said, with their position of ultimate strength in the market, what would be their incentive to do so? Major corporations rarely act out of the “goodness of their heart” (although Marriott may be an exception here), but I would argue that Marriott absolutely needs to be at the forefront of their industry in terms of sustainability to keep its position as top dog.
The hospitality industry is changing dramatically due technological advancements and the explosion of the sharing economy. Companies like AirBnB have already started to negatively impact hotel revenues (and I assume are part of the reason for some industry consolidation). While the current impact of AirBnB on a behemoth like Marriott is probably negligible, Marriott needs to be wary of future changes and a collective confluence of other factors (climate change included). As consumers become more cognizant of convenience and sustainability, competition will only become fiercer (and now Marriott has a whole new subset of competitors). Marriott needs to be on the cutting edge of customer service, reliability, efficiency, and sustainability in order to hold its position. I’d be interested to see how (or if) Marriott is thinking about reinventing the hotel-stay experience, and whether improved sustainability practices is part of that reinvention. The shift to LED lightbulbs was a good one, but more than just changing lightbulbs and shower heads, how can Marriott adopt more sustainable practices that drastically reduce consumption AND costs?
I’d also push on the measurement metrics that Marriott releases. A 13% reduction in GHG emissions sounds nice, but what was the baseline? How does Marriott compare to the competition on a hotel by hotel or even unit by unit basis?
I liked what Avatar said above about Wal Mart taking on greater responsibility in effectively bullying the rest of their supply chain to adopt more sustainable practices. With a ton of cash and ton of influence, how can Marriott steer the rest of the market to follow their lead?
Remember what Spiderman’s Aunt said Craig, “with great power comes great responsibility.”
Craig, I really enjoyed your post! I too wrote my blog post on Marriott International. While I recognize Marriott’s pioneering efforts in the early 2000s to launch a sustainability program, I strongly would encourage the company not to let the issue of sustainability fall by the wayside – despite becoming the largest hotel company.
Have you considered, for example, the role that Airbnb will have over the next 5 years? 10 years? As such, I would contend that Marriott take long-term, proactive approach and strive for innovation to outperform not only its current competition (i.e., Intercontinental Hotels, Hyatt, Independents, etc.), but also Airbnb, HomeAway, FlipKey, etc.
Research conducted by Cleantech Group (CTG) shows that Airbnb properties enable a more efficient use of resources and thus are a significantly more environmentally sustainable method of travel when compared to traditional hotels. Airbnb properties, for example, produce lower greenhouse gas emissions by 61% per guest night when compared to an equivalent guestnight metric at hotels in North America. To put this into perspective, the variance between emissions in hotels and Airbnb would be equivalent to avoiding the emissions of 33,000 cars annually. Airbnb is also beefing up its efforts to partner with sustainable energy source companies; on Nov 4, 2016, Airbnb announced that it will partner with SolarCity, a solar power systems company, to encourage hosts to install solar panels. Upon installation hosts will earn $1,000 and the potential to save money in the long-run and have a positive environmental impact.
Clearly, Airbnb is raising the bar in terms of sustainability; Marriott will need to be creative and impactful in its response to Airbnb.
References:
http://blog.airbnb.com/environmental-impacts-of-home-sharing/
http://www.psfk.com/2016/11/airbnb-hosts-incentives-to-install-solar-in-their-homes.html
Craig, thanks for this piece. As a very loyal SPG member, I’ve been watching the Marriott-Starwood merger with great interest. This environmental piece adds a new lens: Starwood has complimentary focuses in water use reduction and managing energy consumption but they also have additional initiatives in controlling supply chain (http://www.starwoodhotels.com/corporate/about/citizenship/environment.html?language=en_US). I’m curious to see how their initiatives impact Marriott and vice versa.
One thing that neither company has address (to my knowledge) is the building of its properties. I’d like to see the combined company focus more on LEED certification in addition to the other initiatives they are already pursuing.