Efficiency breeds success

Gillian Saunders explains the business benefits of going green

Efficiency and cost savings are big business in hospitality and tourism. It's hard to think of another sector which was such an early adopter of environmentally-friendly business practices. Just think of the smart card key which in many hotels is the only means to activate the lights, air con or heater in your bedroom. This was somewhat rare not that many years ago, but is now fairly standard practice. How many of us would love to activate lights and heating in our homes only when they were being used? We could really save on our electricity bills.

And this is the key point: what saves consumers money, also saves businesses money. Three-quarters of hospitality businesses in our IBR survey are moving towards more environmentally and socially sustainable business practices specifically to lower costs (76%).[1] And when you consider that energy typically accounts for 5% of a hotel's budgeted expenses, it's clear that efficiency savings can make a big difference to the bottom line. More than four in five hospitality and tourism businesses cite reducing the cost of energy as an important enabler for their growth strategy (84%), the highest of all industry sectors bar cleantech.

The same is true of water. Some businesses in the hospitality and tourism sector, particularly golf courses, use a lot of it. The vast majority say that the cost (81%) and supply (82%) of utilities such as water is of vital importance to their operations. Adapting business models to treat the water supply as finite requires a change of mindset; historically many companies treated it as a free resource. But water scarcity and water cost is now starting to present a very real challenge to businesses around the world as the planet warms.

Retrofitting any building to make it 'greener' is enormously expensive, the cost benefits of which take years to come to fruition. But cost saving is not the only driver; the voice of the customer - increasingly audible and powerful in this digital age - emerges as a critically  important driver towards more sustainable business practices in the sector (82%). Increasingly consumers are thinking about the wider implications of their entertainment and travel choices. At the very least they want businesses to be up front with them; to have the relevant information to hand.

The biggest hoteliers are already taking action to improve the environmental efficiency (and so marketability) of their operations. Hilton Worldwide has reduced its water consumption by more than 10% since 2009; the Accor Group is well on the way to reducing its water use by 15% by 2015. Not only are these moves helping to retain the ever-more environmentally conscious customer, but they are also saving the companies money. Hilton's combined energy, carbon, waste and water efficiency savings amount to over USD250m over the past five years.

This success should not be lost on mid-sized businesses. Yes, the multinationals are in the public spotlight and have shareholders who pour over their sustainability report. And yes, their size means they benefit from economies of scale in terms of 'going green'. But take a step back and think about how you rationalise any business decision. Boosting the environmental efficiency of your operations can lower costs and may increase demand. How many other potential investments can match that?