The HBS Digital Initiative brings together perspectives across disciplines to help people understand how technology is transforming organizations and the greater world. The DI manages this forum to highlight perspectives from the HBS student community.
A look into what Starwood Hotels & Resorts has done in light of climate change.
Among the different industries involved in tourism, hospitality is particularly vulnerable to climate change given the relatively high volume of fixed assets in locations that will suffer the most from erratic weather and seasonal changes. Coastal and island destinations are increasingly exposed to dangers of rising sea levels, hurricanes, flooding, water shortages, and erosion. In cold-weather destinations, reduced snow cover and shorter winter seasons driven by global warming also negatively affect business performance. In addition to these direct impacts, climate change also indirectly affects the hospitality industry by damaging ecological biodiversity and changing natural landscapes.
However, it is also important to realize that the relationship between climate change and tourism is twofold. Though tourism benefits greatly from climate stability, it directly contributes to environmental issues through high energy consumption and waste generation. The contribution of tourism to greenhouse gas (GHG) emissions has been on the rise, projected to grow 130% between 2005 and 2035 . Recent calculations estimate that tourism accounts for about 5% of global CO2 emissions – a fifth of which is generated by the hospitality industry .
Green Initiatives at Starwood Hotels & Resorts
Due to heavy consumption of resources, the hospitality industry is under mounting pressure to increase commitment to environmentally sustainable practices. Starwood Hotels & Resorts (which was recently acquired by Marriott ) is one of the hotel groups striving to reduce their carbon footprint and has pledged to cut carbon emissions by 30%, energy use by 30%, and water use by 20% between 2008 and 2020 globally . By 2014, Starwood had successfully reduced carbon emissions by 16.07%, energy use by 12.08%, and water use by 17.26% across all owned, managed and franchised properties .
A third of the progress seen to date has been driven by “foundational” initiatives which are projected to save about $1 billion across the portfolio in less than 10 years . These initiatives target low or no-cost operational and equipment improvements (such as replacing incandescent bulbs with high-efficiency LED lighting and installing low-flow toilets) that often pay for themselves within a year by boosting efficiency . Foundational initiatives also focused on changing behavior, such as the successful “Make a Green Choice” program which rewards guests with loyalty program points when they decline housekeeping for up to three days in a row (excluding checkout day). Up to 49.2 gallons of water, 0.19 kWh of electricity, 25,000 BTU of natural gas, and 7 oz. of chemicals from cleaning products are saved each night of declining housekeeping .
While foundational initiatives will continue to generate savings and minimize environmental impact, most improvements are driven by capital-intensive investments (such as replacing old equipment, hotel renovations, and new construction) and technological innovations (such as harnessing solar energy on site) which have a substantial impact on overall energy usage. Energy in hotels (approximately 60% of a hotel’s CO2 emissions) is mainly consumed by temperature regulation, which represents on average 69% of energy consumption (63% for heating and hot water and 6% for air conditioning; see figure below) . By undertaking in larger projects like re-engineering water heaters and installing control systems, the Sheraton Santa Fe in Mexico City was able to cut energy use by 26.1%, carbon emissions by 35.61% and water consumption by 39.33% .
Since it’s challenging for hotels to be truly green given the nature of their operations (e.g., 30%-70% of a hotel’s square footage is usually public space that needs to be lighted, cooled and heated), building environmentally efficient hotels can have a substantial reduction in overall energy usage . In 2008, Starwood launched an eco-hotel brand, Element, and became the first major hotel brand requiring all of its properties to obtain the US Green Building Council’s LEED (Leadership in Energy and Environmental Design) certification . LEED ranks buildings based on energy and atmosphere, site sustainability, efficient use of water and environmentally responsible materials in construction and maintenance. Element hotels also serve as “sustainability laboratories” for Starwood to pilot various innovations and initiatives  which will allow them to scale efficiently by spreading “tried-and-true” best practices across other hotel brands in the portfolio.
More opportunities ahead
The merger between Starwood and Marriott will likely provide more opportunities to expand environmental goals. Marriott has long been a leader in sustainability, working with developers to turn certain existing properties into LEED-certified buildings . Marriott’s leadership team has also expressed interest in growing Starwood’s Element brand . With combined scale and resources, the merged entity can consider pursuing even more capital-intensive and innovative initiatives such as: