Marriott’s Take on Climate Change
As an industry leader, Marriott continues to push the envelope in driving value for its consumers, while also addressing the critical issues surrounding global climate change.
Marriott International is a hotel company with more than 5,700 properties, including the recent acquisition of Starwood Hotels, across the 110 countries.1 With more than 195K rooms in the current development pipeline, Marriott is continuously looking for opportunities to grow and expand its global footprint. Marriott is no exception to the challenges it faces with the issues of climate change. The risks associated with climate change will impact Marriott through: 1) changes in regulation, 2) changes in physical climate parameters, and 3) changes in consumer behavior influenced by reducing carbon footprint.2
Changes in regulation are mainly due to governments creating fuel/energy and carbon taxes to encourage companies to reduce energy consumption and greenhouse gas emissions. Such taxes increase a hotel’s operational costs and therefore, Marriott’s value proposition of offering an efficient low-cost hotel operating model is compromised.
Changes in physical climate parameters involve both the fluctuation and frequency of extreme weather. The demand from both leisure and business travelers is largely impacted by extreme weather such as tropical hurricanes, snow storms, heat waves, droughts, and floods. Such extreme weather can cause severe damage to Marriott’s hotel properties resulting in displaced guests, increased costs, and decreased revenues. With average global temperatures increasing, Marriott’s hotels face rising operational costs as frequent heat waves increase energy consumption for cooling buildings. In addition, Marriott can be financially and operationally impacted with an increase frequency of tropical storms. For regions experiencing longer periods of drought, Marriott would need to curtail consumption of water, which impacts landscaping, guest services (ex: daily bedding/towels), and overall hotel operations.
Changes in consumer behavior is a risk associated with the growing concerns of climate change and consumers interest in reducing their own carbon footprint. Consumers are holding themselves accountable and expect the same of the companies they patron. Consumers are likely to prioritize and reward companies that adapt their business operations to be more environmentally sustainable. Marriott is viewed as a leader in the hotel space. Consumers will expect Marriott to “green” their hotels to make it a sustainable choice for consumers. If Marriott fails to address the environmental concerns of climate change, then the company will become less relevant to travelers.
Understanding the risks of climate change, Marriott created the Global Green Council in 2007.2 The council is made up of ten global offices representing various departments such as Lodging Development, Marketing, Global Design and Sustainability. The focus of the council is to continue enhancing the company’s sustainability efforts by evaluating their current practices and utilizing their environmental strategy as guidance to set long-term goals. Since creating the council, the company has set several initiatives2:
- Reduce energy and water consumption by 20% from 2007 to 2020
- Empower hotel development partners to build green hotels
- Green Marriott’s multi-billion-dollar supply chain
- Educate and inspire associates and guests to conserve and preserve
- Address environmental challenges through innovative conservation initiatives including rainforest protection and water conservation
To track progress, the company created the Green Hotel Global dashboard, which reports individual property’s environmental impact, practices, and policies. For example, the company tracks landfill waste and calculates emissions for franchised properties. The power of a tracking tool is the management team can track year-over-year progress and identify focus areas needing improvement. Each hotel property can now disclose their carbon, water, and waste footprint for guests interested in sustainability efforts. From a company-wide perspective, the data empowers the executive team to report back to their shareholders on the cost savings and effectiveness of their sustainability efforts.2
As an industry leader, Marriott was the first to develop a LEED (Leadership in Energy and Environmental Design) hotel prototype and is leading with the greatest number of hotels that are LEED certified (more than 140 hotels).2 To continue this trend of LEED certified hotels, Marriott created the LEED Volume Build Program, which provides incentives for developers to create sustainable hotels.
To further engage their group customer, Marriott offers them carbon and water footprint data via the Green Hotels Global dashboard. Meeting planners like the visibility and transparency of the data when considering which hotel to host conferences, etc.2
In summary, Marriott has addressed the issue of climate change in several ways by creating an environmental data dashboard, developing a program for LEED buildings, and providing consumers with data for a hotel property’s sustainability efforts.
That all being said, the company could go further by quantifying the financial impact of reducing their carbon footprint. For example, the company does not use a price of carbon, which would quantify the costs/savings associated with increasing/decreasing the company’s carbon footprint. The company is already tracking water and waste footprint which already has an associated cost/savings. Assigning a cost to carbon is relevant as international governments are beginning to tax on carbon emissions.
1 Marriott International, “Company Overview,” http://www.marriott.com/marriott/aboutmarriott, accessed November 2016
2 Marriott International, “Climate Change 2015 Information Request,” http://www.marriott.com/Multimedia/PDF/CorporateResponsibility/2015_Reports/2015_Climate_Change_Response_final.pdf, accessed November 2016
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Great discussion on how Marriott is addressing the challenges that it faces with regards to climate change. I wonder what specific actions Marriott is taking to address the vulnerability of key properties to destructive weather events, such as those located in hurricane and tornado prevalent regions. While Marriott would incur tremendous cost to tear down buildings and reengineer the structural design with enhanced innovations aimed at improving structural stability, I wonder whether Marriott seeks to implement structural innovations when renovations occur or how to do so in a fashion that isn’t disruptive to guests. This is an extremely important strategy to consider, given that costs for repairing structural damage due to extreme weather events are expected to reach $10 – $23.3 billion in 2050 (https://skift.com/2014/03/31/how-climate-change-is-threatening-coastal-tourism-and-recreation/). Taking a long-term strategy on this and investing in the structural stability of properties now may prove more economical than waiting to fix damage when it occurs.
Interesting! I went to Green Hotel Global and tried to register, and unfortunately it seems like access requests are approved on an individual basis. However it does claim to provide very powerful tools such as: carbon and energy management tool, reporting, budget and project planning tools.
A great example of how a company that is the leader in the sector can take the leadership on setting and procedures for the industry too.
I ‘ve stayed in a couple of their hotels and they truly stand for an environmentally friendly approach. I’m eager to learn more about the process they went through to create the Green Hotel Global dashboard, the challenges they confronted and what are the main reasons not all the other great hospitality companies are not joining them to have this as their standard procedure too. This with means of learning what things can be replicable in other industries and what are the key challenges we need to take in mind when creating a standardized approach to help the environment.
I really enjoyed this post! I couldn’t help but tie this to the sustainability signs that are currently in every hotel bathroom re: cleaning of towels and sheets. I wonder when that started and whether it was fueled by said government imposed fuel/energy and carbon taxes. Regardless of of the impetus, it is great to see a hotel chain like Marriott taking initiative. I appreciate the lofty goals they have set for themselves (hoping to reduce energy and water consumption by 20% from 2007 to 2020). As a prominent force in the space, I hope they lead by example and encourage others around them to follow suit.
I’m really curious about any data surrounding guests and whether their behavior has actually changed following Marriott’s implementation of their “save the earth, reuse your towels” plan. It brings up the issue of StickK: do people change their behavior to react to something good (look how we’re saving the earth!) or do they react to the threat of punitive action (having to pay to get new towels everyday, for example, which would be a little extreme). Just curious to know what results Marriott has seen so far.
A Marriott property I stayed at two years ago struggled to reliably have hot water; I wonder if the property purposely scaled back the use of its water heater to help it look better on the Green Hotel Dashboard… (Just kidding, I think.)
In all seriousness, though it’s true that severe weather (and/or superstorms) cause damage to hotel properties around the world, for the most part, that damage is likely temporary. A more permanent threat to Marriott and its properties, I’d argue, is the threat of rising sea levels. After all, thinking about locations like New York City, Miami, and Honolulu, I’d have to assume that properties in those cities would generate a lot of revenue for the Company (at least compared to properties in, say, Boise, Sioux Falls, and Bozeman). Yet these popular cities are some of the cities most at risk of being permanently flooded if sea levels continue to rise. I’d hope Marriott’s at least considering this threat when evaluating how climate change may impact its business in the future. After all, if Times Square is partially submerged in 2100, the premium Marriott Marquis might also be underwater – possibly in both a literal and figurative sense.
On another note, from working on an audit of a hospitality company many years ago, I recall that many properties are franchised (or at least managed by a third party). To what extent must franchisees and/or third-party managers adhere to sustainability policies that Marriott sets? Are all of the franchised properties a part of the Green Hotel Dashboard?