Not Only Is Vegas Taking Your Green, It’s Going Green Too
Some in the land of excess and luxury are taking it upon themselves to raise to bar on sustainability in the hospitality industry
Are the bad guys in hospitality actually the most eco-friendly?
The hospitality industry’s service is predominantly based on serving the world’s population with an experience of comfort and indulgence that allows them to escape the drudge of their everyday lives. Though the industry has set out some targets for sustainability, Professor of climate change at the University of Manchester, Kevin Anderson, cautioned leaders in hotel industry about the inadequacy of the existing targets at Responsible Tourism Day in November 2015. Moreover, within the hotel and resort industry, luxury gaming resorts are commonly viewed even further as destinations of excess, waste and lavish living, but is that characterization a fair one?
What Is Global Warming And How Does The Hospitality Industry Play A Role?
Since the industrial revolution the earth’s average temperature has increased by 1.5 degrees Fahrenheit, predominantly driven by increases in the output of greenhouse gases into the atmosphere such as carbon dioxide, methane and nitrous oxide. Greenhouse gas emissions have increased significantly since the 1800s, primarily driven by the burning of fossil fuels and the clearing of forests and other agriculture practices.
Source: “Climate Change 2014: Synthesis Report,” Intergovernmental Panel on Climate Change, 2014, p.3,https://www.ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_FINAL_SPM.pdf, accessed May 2016
The hospitality industry is a massive user of electricity and water, and produces hefty amounts of trash and food waste. The hotel and resort industry pours in billions of dollars into state-of-the-art facilities world-wide without any eco-friendly systems in place. These facilities produce an immense amount of greenhouse gas through blasting air conditioning and recklessly leaving lights on 24 hours a day. Experts find it crucial that moving forward hotels begin to invest some of their billions to have energy generation on-site and utilize building energy management systems to reduce their carbon footprints.
Las Vegas Sands An Unexpected Leader In Eco-Friendly Hospitality
Las Vegas Sands (NYSE: LVS) is a casino and resort operator based in Las Vegas, Nevada that owns famous properties such as The Venetian and The Palazzo. The company develops and operates destination resorts that include luxury accommodations, gaming, high-end retail, five-star dining, shows and entertainment, and convention and meeting space. The company operates 10 facilities in Las Vegas, Bethlehem, Macao and Singapore including three of the world’s largest convention centers.
Sands ECO360 and Eco-Friendly Initiatives
In 2007, Las Vegas Sands was one of the first resort companies to integrate LEED Green Building standards, into its construction of The Palazzo. LEED building design and construction standards put forth by the US Green Building Counsel make up the most innovative green building framework in real estate development. In 2010, Sands launched their ECO360 Sustainability program making them one of the first movers in creating a holistic eco-friendly program in gaming. The program was built on four pillars, Green Buildings, Environmentally Friendly Operations, Green Meetings and Stakeholder Engagement.
Source: Las Vegas Sands Corp. 2015 Environmental Report. p 6. http://www.sands.com/content/dam/corporate/sands/master/main/home/sands-eco-360/our-news/pdfs/2015-Sands-ECO360-Report.pdf
The company saves nearly 100 million gallons of potable water per year, recycles 55 percent of daily trash and 75 percent of food waste, and saved ~113 million kWh in 2014 through efficiency projects . They accomplished the water targets by using water control and recycling systems and implementing foam soap. The recycling and food waste targets were achieved by optimizing operations and sending food waste to local pig farms for feedstock. The energy savings were driven by efficient HVAC systems and changing to LED lights. These initiatives from the ECO360 program were clearly seen by the world on June 2, 2016, when Las Vegas Sands was ranked highest among all hospitality companies in Newsweek’s Green Rankings both for the US and the whole world. The company was ranked #39 in the US and #74 in the world on respective lists of 500 companies across all industries.
If You Want To Be A Showoff You Better Have Your Ducks In A Row
Operating in the luxury gaming industry is one that puts a giant target on the back of your company in terms of corporate responsibility. Therefore, if a company wants to be in this lucrative business it’s important that they understand that they will need to be exceptional corporate citizens of the globe. Despite the negative perceptions of gaming hospitality establishments, Las Vegas Sands has been a leader in pushing the envelope in terms of building an eco-friendly business model. They have created initiatives ahead of any of their competitors and are a model for not just luxury resorts but the whole hospitality industry. (717 words)
 Climate Change in 2016: Implications for Business (HBS Case)
Student comments on Not Only Is Vegas Taking Your Green, It’s Going Green Too
Thanks for the interesting and surprising read. I was unaware of Las Vegas Sands’ consciousness of sustainable building practices. At first, I thought that the company should do a stronger job of promoting themselves to lead and encourage other luxury real estate developers to embrace sustainable practices too. However, your earlier point about their likely perpetual target on their back may have prevented them from grabbing the positive leadership spotlight.
Our dedication to sustainable business practices has resulted in numerous awards and accolades from leading industry authorities. For instance, we’ve been awarded a position on CDP’s Climate A List, been listed in the Dow Jones Sustainability Indices for our industry-leading corporate sustainability efforts in North America, and have been recognized as the “greenest” hospitality company in the world by Newsweek’s Green Rankings. While we are extremely proud of these accomplishments, we also realize there is still work to be done in regards to mitigating the impacts of climate change, both for our integrated resorts in particular, and for the industry sector as a whole.
Appreciate the insights, Yassine. I fear that the majority of casino operators are fueled by greed and irresponsibility within an environmental context. That said, given the public scrutiny of operators, I am surprised that others have not adopted sustainable practices as well following Las Vegas Sands’ leadership. An interesting study could be conducted to better understand the psychology of the typical Las Vegas consumer, particularly as it relates to hotel / casino preferences. I could see how promoting LEED certification could resonate with certain consumers. On the other hand, my intuition is the the allures of Vegas (i.e., vacation, luxury, extravagance, excitement), or what drives people to Vegas, fundamentally conflicts with the mantra of “doing one’s part to positively impact the world.” If the latter is true, then operators / owners could potentially not view upgrading environmental standards as having sufficient return on investment to justify the cost, particularly given the declining visitation / spending trends in Las Vegas putting pressure on profits.
We survey all of our guests upon completion of their stay, assessing their entire experience at our resorts, including their review of our sustainability features and offerings. Our industry-leading Green Meetings program for conventions and conferences has perhaps been most influenced by such feedback, as the program has evolved through the years in order to meet the ever-changing needs of our customers
Your post hints at the challenges involved in being a first mover in the sustainability realm. I do wonder what motivations prompted LVS to invest: did they perceive it was the “right thing to do”? did they think it would impact customer loyalty? do they get tax or other kinds of incentives? do they see a clear path to ROI from this investment? The other comments here likewise question customer preferences and the factors that might influence a decision to stay at the Venetian vs. another resort in Sin City, and whether eco-friendliness would play a meaningful part in that decision.
It seems that some of this might be related to broader sustainability efforts taking place in Las Vegas and Nevada more broadly. In 2005, Nevada passed a green buildings incentives package to “green the strip.” Indeed, according to the Guardian, Las Vegas Sands and MGM received “millions of dollars in tax breaks” for their LEED construction activities (https://www.theguardian.com/sustainable-business/las-vegas-sin-city-sustainable). Though this seems a bit insidious, it actually seems that the legislation inspired these companies to set a precedent for a more holistic approach to sustainability — in their buildings, practices, meetings, waste, etc., as you highlight above. If the city of Las Vegas decides to pursue a sustainability strategy in a more directed way, they’ll have an eager and innovative set of partners in the private sector, and that’s often half the battle!
Transparency and accountability are our primary objectives here at Las Vegas Sands. Accordingly, sustainability is an integral part of our business strategy, as our responsibility to the planet is as important to us as our commitment to the comfort and well-being of our guests and Team Members. To that extent, we are consistently considering the overall economic, social and environmental impact of our developments and operations. As you alluded to, some of our sustainability projects through the years have received financial incentives such as tax breaks for LEED construction in Las Vegas. Others, like our recently opened resort in Macao that is also pursuing LEED certification, did not benefit from any such incentives. However, perhaps more important than the tax breaks we have received, is the ongoing support from our senior executives and Team Members who all take pride in helping us advance our Sands ECO360 program.
While we are focused on our resorts on the Strip and elsewhere, we are certainly aware of the sustainability efforts that the city of Las Vegas, led by Mayor Carolyn Goodman, has implemented recently as the city aspires to position itself as a global leader in sustainability. In their pursuit of such a goal, as of December 2016, the city of Las Vegas is now drawing 100% of its power from renewable energy sources, as more than 140 city facilities are powered with renewable sources of electricity [http://www.reviewjournal.com/news/politics-and-government/las-vegas/city-las-vegas-reaches-clean-energy-goal].
Great article. Do you know if any of these sustainability initiatives were profit-neutral or accretive? For example, I know LED lights are often touted as not only more energy-efficient, but also less costly over the lifetime of the bulb. The reason I ask: Sands seems to be incredibly committed to going green, and I wonder if its truly out of altruism or if they have figured out a way to do this with alignment to the bottom-line. If the latter, then this would seem to be very replicable across the industry and have massive impact.
Given that we are a publicly-traded company, we do have to consider financial measures of performances, and accordingly, many of our sustainability-related projects do include a justifiable payback period and return on investment (ROI). As you mentioned, LED lights are one example of a mutually-beneficial sustainability project, providing both financial and environmental incentives for implementation. However, there are other measures such as our recycling efforts that have incremental cost.
Interesting reading! This post reminded me of some financial analyst reports on Las Vegas Sands I had read, when one of my clients wanted to invest in casino industry. If my memory is correct, LVS is the largest casino resort company and it’s financial base is extremely healthy compare to its competitors such as MGM. You might already know but, as an additional information, I would like to mention the fact that one of their several success derived from its awareness of social responsibilities; Singapore government licensed LVS as the second casino operating in the country, not only because they were the market leader, but also the main building construction cleared the Green Mark Certification criteria . Marina Bay Sands is still the only one large building awarded the Green Mark Platinum in Singapore. 
This is a great point you bring up. Given that we operate resorts across the globe, we strive to integrate our operations with the utmost respect for our hosting communities. As you mentioned, Marina Bay Sands in Singapore was designed and constructed using the Singapore Building Construction Authority Green Mark Standard, and includes such sustainability features as a rainwater harvesting system and wind-activated art that reduces solar heat transfer. Relatedly, when we began the design and construction of our newest property, The Parisian, in Macao, China, we relocated a green building expert to oversee the implementation of our Sustainable Development Standards to augment our existing team responsible for sustainability in day-to-day operations in this region.
We really enjoyed your write-up on our organization for the Fall 2016 Climate Change Challenge. You encapsulated the challenge we face on a daily basis; that is, managing enormous integrated resorts while concurrently operating in a holistic and sustainable manner. It’s a constant challenge, and one that we choose to address proactively through our Sands ECO360 Global Sustainability Strategy. The challenge you mentioned in the opening paragraph in relation to the “inadequacy” of existing targets is particularly salient. Despite the introduction of climate change mitigation measures by companies and businesses alike, the global concentration of greenhouse gas emissions continues to rise. Given that a large portion of greenhouse gas emissions can be attributed, either directly or indirectly, to the corporate sector, it is clear that our sector as a whole has a deliberate role to play in protecting the climate going forward. We hope that our forthcoming targets for 2016 and beyond will address this issue in a more comprehensible, and scientifically-sound, way.
Katarina Tesarova, VP of Sustainability, Las Vegas Sands Corporation