Considerations for the Canadian Hotelier
Without a doubt, the state of the economy has been the dominant issue on the public's mind in 2008. However, the "hot" issue that will once again loom large in 2009 and beyond is environmental sustainability, and the variety of challenges that we will face with the reality of climate change. What the Canadian hotelier needs to understand is that it is possible to maintain cost control and improve guest satisfaction by adopting more environmental practices.
Not only will environmental practices become widespread in 2009, but also they will eventually become a reality in the form of mandated energy reductions, carbon taxes, and green building standards implemented either by government or the hotel brands themselves. The Government of Canada is currently updating the Energy Efficiency Act to regulate the amount of standby power consumed by many products (i.e. computers, TV’s, etc.) when they are not in use, in an effort to reduce Canada's greenhouse gas (GHG) emissions by 20% as of 2020. With respect to provincial legislation, B.C.’s carbon tax is only one of a variety of possible approaches. Quebec has also introduced a form of carbon tax that supports developing green technology through a small levy collected from petroleum companies.
From the hotel industry perspective, we see that those chains that have recognized the importance of corporate social responsibility policies (CSR), energy conservation, and other environmental issues to both their customers and their bottom line, are becoming more and more public about their initiatives. For instance, a recent press release indicated that the Delta Whistler Village Suites introduced a hybrid heating system in January 2008 that reduced GHG emissions by 45% and cut the hotel's energy expenses by 30% over a 6-month period.
One question you may be asking is whether or not your customers really care about going "green?" One of the key consumer trends that we are seeing is an increased focus on health and well-being, to the extent that people want, and demand, to travel the same way that they live. These same people also have a keen interest in the environment, including what is happening to our climate. They are the ones buying into green building construction, and sustainable communities. Media attention and increased access to information are helping to develop a global environmental consciousness in the everyday consumer, and this certainly has an impact on the travel and tourism industry. According to Deloitte & Touche, the segment of “green”-specific buyers has grown to 17% of the US consumer market. Furthermore, the Market Metrix Hospitality Index survey for 2008 indicates that "eco-friendly" or green initiatives are considered "very important" to 12% of hotel guests across all market segments.
In the hotel development sector, many companies are realizing that the future value of properties that have been built using green techniques, such as the LEED (Leadership in Energy and Environmental Design) Canada program, is going to increase. As a sign of things to come, the International Tourism Partnership (ITP) recently announced the release of the third edition of its Environmental Management for Hotels, an industry-acclaimed guide to quality environmental management and sustainable operations. Europe is currently the world-leader in terms of implementing green practices and building initiatives, yet according to the Canada Green Building Council, as of November 2008 there are 123 LEED certified projects across Canada (excluding residential projects), and more than 500 developers with LEED certifications. The U.S. Green Building Council has reported that the development of “green” planning at the outset of a new hotel development can neutralize many of the costs of “going green” later on. Within the GTA market, the CNE’s Automotive Building is undergoing a $47 Million redevelopment that will transform the exhibition hall into the new Allstream Conference Centre, which is targeted to open in September 2009 with the LEED Silver certification.
Certainly there remains a great deal of criticism as to the "one-size-fits-all" nature and lengthy timeline of the LEED certification process. Nevertheless, equipment, supplies and programs at existing hotels can be implemented to make a property more sustainable, and make the environment healthier for guests and staff. For instance, introducing in-room recycling programs, researching alternative energy sources (i.e. hydronic heating and cooling systems), installing water saving hardware in bathrooms, and sourcing food and beverages for restaurants locally, costs little, but does a lot in terms of creating a more resource efficient property. Many properties are beginning to seek environmental rating designations from the Audubon Green Leaf Eco-Rating program, Green Seal program, or the Hotel Association of Canada’s Green Key Eco-Rating program, as a value-added service to their guests.
It has been said that "green" represents the next greatest "niche product" opportunity in the hotel industry, yet we have already seen the evidence in brands like Element recently entering the U.S. market.
Although PKF is not actively promoting any specific practices or techniques, we do believe Canadian hotels should be aware that environmentally sustainable practices could reduce costs, generate revenues, and as a result increase value for a lodging facility.
K. Rebecca Pickford, Consultant
PKF Consulting Inc. - Toronto
