Home Hospitality Improving the Bottom Line With Back-of-House Measures

Improving the Bottom Line With Back-of-House Measures

With the new legislation put forward in Congress that is aiming to ban gas stoves (citing both health and environmental concerns), it’s easy for many of us to get caught up in the sheer divisiveness of the news story and miss the overarching trend. Sustainability and ESG (environment, social, and governance) are not only here to stay but, as this national policy demonstrates, leading governments and public authorities around the world are willing to take increasingly bolder actions in the existential fight against climate change.

But political parties being political parties—that is, focused on their own survival above all else—nothing like this comes out of left field. It’s preceded by mountains of polling and other population survey data, which in this case suggest that global warming is now important enough to enough people to warrant pushing this agenda without the risk of alienating too many voters.

It’s a sign of the times, and the travel industry is already being targeted for stricter guidelines regarding emissions and recycling programs. And just as voters are now signaling that they want more environmental action, travelers are likewise becoming highly cognizant of their carbon footprints. As highlighted in a report on 2022 consumer travel trends by the World Travel & Tourism Council and Trip.com Group, 69 percent of travelers surveyed are actively seeking sustainable travel options. Google even has a dedicated search tool to help users find eco-friendly hotels.

This isn’t a novel concept to our industry either; Accor has its Planet 21 program and Marriott has Serve360, while major global inventory buyers are giving hotels reason to become more environmentally responsible. For example, Siemens’ Green Stay Initiative requires all corporate stays to be with preferred hotel partners.

All told, this green revolution is no longer something any hotel organization can ignore, but that doesn’t mean you can’t add some green to your income statements in the process. From our experience working with owners and C-level executives, there are two key territories to help you focus your organization’s ESG efforts: those that function behind the scenes and those that are guest facing.

Going Green Behind the Scenes

Before getting ahead of the curve, there are some obvious steps that every hotel can take to realize significant cost savings, reduce a property’s overall carbon footprint, and develop a roadmap for ongoing improvements. Most of the biggest efficiencies, though, will be realized in the back of the house, requiring investments large and small in new capital assets and setting aside budget for future renovations.

Yes, we are talking about the usual suspects of water-recycling systems, new energy-efficient laundry machines, low-wattage lighting, and IoT thermostats that become in-room climate controls when the room is unoccupied. While there is an array of projects you can undertake, the first step is to start setting aside a portion of net operating incomes as a reserve fund. The green revolution isn’t slowing down, and you must be financially nimble. Concurrently, we suggest recruiting a specialist, someone who understands the municipal, regional, and national laws and ideally holds credentials such as LEED Green Associate. Not only would this individual help to identify the low-hanging fruit—in this case, the relatively low-cost projects with easy implementation—but he or she can also conduct a waste audit to assess a property’s total greenhouse gas emissions so that there is a firm goalpost in mind for achieving 100 percent sustainability.

As they say, you can’t manage what you don’t measure, and this principle applies to any eco-conscious roadmap you develop. A critical part of this management, however, is not just aligning the finances and ordering new capital assets, but also ensuring that your “human capital” isn’t overloaded. Your engineering team will undoubtedly have a hand in every single sustainability initiative, and unless you are building a new hotel, you are dealing with a live product, meaning that on any given day there are urgent maintenance tasks and regular system checks that must be performed. Hence, any eco-friendly task scheduling must also be manageable within your engineers’ time; otherwise, you risk turnover in this department due to workplace stress.

Going Green to Be Seen

No guest will ever see the shiny new water-efficient laundry equipment you install that will add thousands of dollars to your bottom line each year; nor will they care to read about these specific upgrades in a press release or in the fine print on your website. What they will see is a stamp of approval from a recognized authority; for example, getting a B Corp Certification or working with an affiliate of the Global Sustainable Tourism Council.

While it may be rightfully argued that the booking decision for most hotel guests is still primarily based on location, price, and brand amenities ahead of sustainability, we argue that any eco-friendly measures you take—as represented by the promotion of sustainability certifications on every consumer channel—will afford your hotel sizeable marketing cachet to both appease eco-conscious travelers and command higher rates in the process. Besides the hard work to get some eco-approved logos attached to your brand, there are other ways to use sustainability to drive bookings. Examples include climate-conscious restaurant concepts as a “reason to visit,” incorporating biophilic design into the public spaces and guestrooms, or going further like 1 Hotels where sustainability reverberates through every aspect of the physical structure and operations.

Then, once guests are onsite, you visibly reinforce these values by going paperless with apps or in-room tablets, eliminating all single-use plastics (dispensers versus bathroom amenities, for instance), installing more recycling bins to encourage guest waste reduction, and looking at ways to reduce food waste by highlighting your food scrap composting or local food bank partnership.

Overall, the customer-facing enhancements you implement should fit a brand narrative that exudes compassion and renewability. For rural properties, for instance, the herb garden that guests walk past may not provide a tenth of the ingredients used in the restaurant, and yet it tells a great story. The same applies to having all meal components locally sourced to drastically curb food miles. The lesson here is that you can and should promote your sustainability efforts.

Sustainability will be front and center for at least the rest of the decade, but as we’ve shown, there are ways to make this green revolution work in your favor so that you are driving cost savings while also pivoting to attract this new eco-conscious customer mindset.

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