Memorandum
To: Dr. XYZ
CC:
From: XYZ
Date: MM/DD/YYYY
Re: Sustainability in the hotel industry: weak in one pillar! For my assignment for BADM 798 Spring YYYY course, I interviewed a hotel executive to determine the company’s (i.e. hotel’s) perspectives on sustainability. The business professional I interviewed was Mr. XYZ, the Executive Director of Ramada Inn - American City. Mr. XYZ has Post-Graduate Diploma in Business Management as well as degrees in Software Engineering and Systems Analysis. He has 10 years of work experience in Marketing Fast Moving Consumer Goods (FMCG) and 15 years of experience in Hotel Management. The interview occurred on the premises of Ramada Inn – American City on MM/DD/YYYY from 5:30 – 6:30 p.m.
Ramada Inn is affiliated with the Wyndham Hotel Group, one of the largest hospitality groups in the world with businesses across six continents. As such, Ramada has been around for more than 50 years and has nearly 900 hotels in about 50 countries across the world. Although the owners and franchisees have lot of flexibility in the way they run their daily operations, they have to follow certain policies that distinguish the Ramada Brand (like free internet access) and also follow some basic rules and policies of the Wyndham group. I had reviewed the company website for information in this regards and found Wyndham’s take on Sustainability and the “Wyndham Green” program. No additional information as regards sustainability was found on the Ramada Worldwide website. With this background, I asked Mr. XYZ to define sustainability from his company’s perspective. According to Mr. XYZ, for his company, “sustainability” generally refers to best customer service and customer satisfaction leading to improved profits and social status in the community by implementing earth friendly practices with resultant durability and longevity for the brand Ramada. I intimated to Mr. XYZ that Wyndham’s website mentions the “Wyndham Green” program and as per that website, “sustainability means meeting the needs of the present generation without compromising the needs of future generations”. Wyndham does this by delivering Triple Bottom Line benefits that are social, economic and environmental. Mr. XYZ informed me that he was aware of the Wyndham Green program and that Wyndham had started sending its associates a newsletter on a regular basis highlighting such policies and initiatives. Although on paper, the policy mentions social, economic and environmental aspects, in reality, most emphasis is on economic issues followed by environmental concerns. The social aspect is a distant third and comes into consideration only when the above two are well taken care of.

As regards specific sustainability initiatives that the company engages in, the focus is on conservation of resources (with consequent cost savings). The specific initiatives are aimed at decreasing power and gas utilization (without affecting guest services, comfort, décor and ambience of the hotel) and conserving water. This is approached by replacing equipment with more technologically advanced appliances that use less energy or gas and are more productive and/or energy efficient, switching to low flow shower heads and faucets and water conserving toilets. Solar panels have been tested in some hotels (of Ramada Inn) and are being gradually implemented across different Ramada Inn hotels (like Vineland Ramada Inn but have not reached Ramada Inn – Bossier City yet). Other initiatives include switching to eco-friendly chemicals for laundry needs, replacing incandescent light bulbs with fluorescent ones (CFL), which in turn are being replaced with LED bulbs which are even more energy efficient than CFL. The use of paper for office related work is also being critically reassessed. Increasing use of electronic equipment with availability of receipts, orders, invoices and other information online had decreased the need to print all these things on paper. Smartphone use has taken this even further in the field. Manuals and other information which was formerly necessary to be carried with employees can now be easily be assessed via smartphones. Paper is also recycled. These initiatives result in direct cost savings by decreasing utility expenses and also maintenance costs. As regards the social (people) aspect, there are no clear cut initiatives targeting that pillar of sustainability. Providing employment is a benefit that is not unique to Ramada Inn – American City as most businesses provide employment. They support and facilitate business and vacation travel and offer free perks like free internet-access, free breakfast and free parking. They do offer training to employees as regards the advantages of their conservation approaches and how to use the newer appliances. Employees are also trained in various conserving methodologies. For example, kitchen and food service employees are trained to cook the amount of food according to expected number of people at breakfast and avoid wastage. Unused food is being more effectively refrigerator so that it can be used again. Recycling is encouraged. Even guests are being educated about the benefits of conservation or earth friendly measures by in-room brochures and information on the hotel websites. Guests are encouraged to decrease frequency of washing towels and other linen in the room if it has been very lightly used. Guests are also encouraged to recycle. Perks are being considered for guests to promote such initiatives.

Sustainability initiatives discussed above have become a key component of strategic planning for the hotel. There are now several state-specific laws targeting pollution, waste disposal and energy efficiency. Incorporating such initiatives in the strategic planning process helps the hotel remain in compliance with such laws. Presently, most hotel chains provide a basic standard of service as regards rooms and amenities to their customers. To attract new customers as well as to retain existing customers, the current strategy by various hotels focusses on providing additional value and non-tangible benefits to the customers. The generation X and especially the Millennium generation is quite keen on social and environmental issues and show more inclination towards planet related issues and causes. So earth friendly policies tend to attract this class of customers who appreciate these initiatives and care about these issues. They are willing to pay more to use hotels that match their social viewpoints and also become ardent promoters of these hotels if they have a good experience at the hotel, resulting in free marketing by word of mouth (which is very valuable). Moreover, there are awards for green initiatives like LEED certified buildings and Green Seal Certification and earning such awards brings prestige and additional marketing benefits. In addition, such initiatives result in considerable cost savings and hence have become an integral part of strategic initiatives like remodeling and replacing existing equipment and facilities.

When considering sustainability initiatives detailed above, cost is the primary consideration, followed by environmental benefits and lastly social benefits. Cost savings and efficiency of initiatives under consideration are thoroughly researched and their environmental benefit is also assessed (but not in monetary terms yet). Payback analysis seems to be the dominant mode of analysis used for these initiatives. Ramada assessed the effect of switching to water-conserving toilets and low flow shower heads by looking at decrease in their water bill. They noticed considerable decrease in their water bill after implementing the above (decreased from approximately $7000 per month prior to switching to approximately $1100 per month after switching the toilets and shower heads). They estimated that their payback time was about one and a half years for the above. At present, they are in the process of changing faucets to low water flow faucets. After switching the shower heads and toilets, the management closely monitored customer feedback and complaints (direct customer feedback as well as online feedback) and ensured that the changes did not negatively affect their customers. Once positive feedback and benefit is realized and confirmed, more such initiatives are then considered in the strategic planning process.

Sustainability is managed mostly by the initiatives of managers. Although Wyndham promotes sustainability initiatives (as demonstrated by its website), in the real world, its application is more suspect. They support and encourage it as long as the initiatives support their existing vendors and suppliers. Wyndham group approves suppliers and vendors and franchisees are mandated to procure everything from such approved vendors and suppliers only. Apparently, Wyndham Group gets a commission from these approved vendors and suppliers. It is quite possible that the approved suppliers and vendors may not carry the most energy efficient appliances or resource conserving systems, accessories and fixtures. This may become a barrier to implement these changes. For example, when Ramada Inn – American City manager found the water conserving shower heads, Wyndham Group initially did not allow them to use the new shower heads as they were not being supplied by their approved vendors. The management had to convince the Wyndham Group to allow them to still procure them outside of their approved vendor list. Sometimes, a select group of hotels are allowed to try new initiatives on a trial basis and based on their experience, the successful initiatives may then be implemented across the board at all hotels. So implementing sustainability initiatives does require some adaptation on the part of the business.

Ramada Inn – American City definitely has seen multiple benefits from some of their sustainability initiatives they have implemented so far. Switching to energy efficient and water conserving accessories have led to direct cost savings as well as gave a fresh and new look to the hotel and guest rooms. This has improved the image of the hotel, built its brand value and helped retain customers as well as gain additional customers. It also led to increasing collaboration between other managers of various Ramada Inn hotels regionally, nationally and even internationally. Since some initiatives are implemented on a trial basis at select hotels, direct feedback from their management is sought and valued. Such interactions have also led to exchange of other ideas beneficial to each other. It has also led to innovation. In fact, Mr. XYZ has proposed an innovative idea to conserve even more water. He notes that water from the shower now goes directly to the sewage. However, it is not dirty and certainly has potential to be reused. He has proposed a large underground tank-like facility below the hotel with built in filters and cleaners that will collect the waste water from the showers, clean it and reuse it for toilets and then go to sewage. It is estimated that such a facility would cost about $200,000 for a 200-room hotel and the expected payback is about 2 years (by significant water conservation and decrease in water bills). Thus sustainability initiatives have stoked innovative streaks in management as well.

The company has had some difficulty in assigning proper metrics to measure, analyze and present sustainability initiatives to the stakeholders. The local environment at Ramada Inn – American (which includes awareness of local people in the community about such people as well as local governmental offices) has not shown too much awareness and interest in such initiatives. The governance is more interested in ensuring that applicable laws, rules and regulations are implemented appropriately and that businesses stay here bringing in revenue in the form taxes and customer spending to support the local economy. They have not sought or demanded too many green initiatives. The local community also looks at the business more as a source of employment and also prefers to keep the business in town and active so that they can benefit from out of town customer spending. So, most of the metrics somehow get converted to a dollar value. In Mr. XYZ’s own words, “It’s all about the money and bottom line!” Management frequently tries to justify these initiatives to stakeholders (mostly shareholders) by demonstrating benefit in the form of cost savings (i.e. profits). Conservation of earth’s resources is considered, but again it is assigned a dollar value in the form of say decreased water bills (rather than how much water is preserved for the future generations to use). Management has a hard time measuring the environmental and social impact of their sustainability initiatives. The company is not too vested in measuring its carbon footprint as they think it measures only aspect of energy consumption and pollution but is not a wholesome metric. They are aware that larger, more established forms probably are working on such measures and some may even have come up with appropriate metrics, but they have still not focused on that yet. The company does see social benefits like social goodwill in addition to cost savings and compliance with regulations, but they still are seeking a user friendly and effective way to measure this. They don’t see much risk with such initiatives as so far, most of the measures have shown to decrease costs and increase profits. On the contrary, they provide significant opportunities to increase profits, increase social goodwill and standing in the community and potential innovation.

In summary, Ramada Inn – American City does have some sustainability initiatives. Their definition of sustainability is slightly skewed with more emphasis on profits and planet. They probably may be helped by additional information about the social (people) aspects of sustainability and with some easy to implement, accurate and meaningful metrics for their sustainability initiatives. Using Maslow’s Hierarchy Framework, I think this company would fall somewhere between Level 2 and Level 3.

References:

1. Ramada Worldwide. (n.d.). About Ramada. Retrieved from http://www.ramada.com/about-us/about-ramada 2. Wyndham Hotel Group. (n.d.). About Wyndham worldwide. Retrieved from http://www.wyndhamworldwide.com/about-wyndham-worldwide 3. Wyndham Hotel group. (n.d.). Wyndham Green Program. Retrieved from http://www.wyndhamworldwide.com/portals/0/documents/green/Global-Best-Practices-2010Final.pdf 4. Wyndham Hotel Group. (n.d.). Green Business Drives. Retrieved from https://developmentsupport.wyn.com/toolbox_download?id=564B0ED8-DBE1-77AD-2BF38D9F27473E40