A Tale of Two Chains

Different takes on going green on a large scale

By Tara Mastrelli

IHG’s web based Innovation Hotel serves as a laboratory for new ideas and reimagines what a green hotel could be.

There is no doubt that green building and operations have made headlines in the hospitality industry in the past year. But not surprisingly, the majority of those properties have been independently owned, boutique brands, or exclusive luxury resorts. There are serious challenges to implementing cohesive sustainable programs across a portfolio that encompasses close to 4,000 hotels across nearly 100 countries around the globe. Hospitality Design sat down with the men with the master environmental plans for two major industry players—InterContinental Hotels Group and Accor. Two very different portfolios; two very different backgrounds; two very different approaches; one common goal: to create the greenest, most energy-efficient, positive-cash-flow producing, low-impact hotels that they possibly can with the resources they have.

David Jerome Senior Vice President Corporate Social Responsibility InterContinental Hotels Group (IHG)

With the creation of the Innovation Hotel online last year, IHG solicited feedback from consumers on what they thought a green hotel could be. Armed with this data, the company has taken the next step with Green Engage—an online system designed to help its GMs manage energy consumption more effectively. The system is set to roll out across the company’s seven brands including Holiday Inn, Crowne Plaza, and InterContinental following final trials in 650 hotels, which started last month. It is expected to be available to all 4,000 hotels mid-year.

A rendering of the facade of the new Motel 6 prototype.

Motel 6’s prototype guestroom.

HD: What does corporate social responsibility encompass at IHG?
DJ: It has a lot of threads to it, but largely what we’re trying to do is make it part of the way we do business, not how we give money away, but how we make it.

HD: So how do environmental aspects fit in?
DJ: It’s a portion. There are a lot of different elements, and some that are mundane, but I think the community would be one very big one for us. And the environment is very much a big issue for us now because we’re trying to look at ways to not only reduce the impact of our hotels, but also there is a lot of energy spend that we do, so we want to try to save there.

HD: You launched the Innovation Hotel online last year to solicit feedback. How’s that going?
DJ: It’s interesting. It has the longest session times on our website. So when people find it, they actually spend quite a bit of time on there. And the recent discussions we’ve been having about starting our own online tools for
measurement and management for energy have even propelled further visits.

HD: Have you been able to implement any of the suggestions?
DJ: We’ve put some into our Green Engage tool that we have where we’re now beginning to look at how we want to measure and manage [energy consumption]. So a lot of what we pick up on the Innovation Hotel we’ve tried to build into there, or further underline the need to put certain things we were going to do anyway. Also we’re going to continue to evolve the Innovation Hotel, so get ready for version 2.0 coming out here in about a month.

HD: Is there a real-life version of the Innovation Hotel in the works?
DJ: We’re certainly looking at it, but I don’t want to get rid of all the fun for you.

HD: Creating the virtual property does sound like a great laboratory for ideas.
DJ: It’s one of the things I really like about IHG. There are commendable approaches to dealing with the environment or these issues, where you just sort of start and say, ‘We’re going to go to the moon and we’re not sure how we’re going to get there, but we’ll be there in 10 years time.’ Certainly that’s one approach, and it’s not a bad one. But I like our approach a little bit better, insomuch as it allows us to see what are the facts, what are the things we’re trying to achieve, and what are the opportunities, and how do we address it. So we won’t talk about reducing carbon by 50 percent unless we actually know how to do it.

HD: How would a hotel use Green Engage?
DJ: It’s an online tool, so they just log on, and enter their energy waste and water data, and then they can get reports on what they’re doing, and look at that vis-a-vis their other hotels. And then they can go into another section of the tool, which talks about things they can do to reduce their impacts and manage their impacts. Do you have your senior leaders involved? Are you managing it monthly? If you’re a new build hotel, consider the way you site the hotel, and if you’re a current hotel, consider your operations and how to make them more efficient.

HD: Beyond green, are there more sustainable elements to Green Engage?
DJ: There are elements of community bits in Green Engage. For example, we do ask the hotels to be involved with their communities, to look at their supplier network, to think about when you build a hotel what does it mean to the site, and to source locally when possible and reasonable. So there are elements there that do go beyond, ‘How do I optimize my energy?’ From IHG’s broader perspective we are aware that we have impacts on a community and the environment—social, economic, environmental—and we try to manage those particularly when there’s an opportunity for us to create value for the community and ourselves, and those are the things we’re trying to optimize.

HD: So which initiatives have come out of the Innovation Hotel and have made their way into Green Engage?
DJ: There are different things that have come up, like setting up a green team, or making sure the hotel’s management is involved, and some of the operational things particularly that we got as comments. And being very transparent about what happens in the back office was sort of interesting for us. And seeing where people really like things and where they’re conflicted on things is interesting.

HD: And what are they conflicted on?
DJ: For example, soap dispensers. There’s a real conflict in consumers there. Some really like it, and some are concerned about the sanitary aspects of it. It’s just really great data to have.

HD: So is that just a guest perception issue? Or an actual operations issue?
DJ: That’s it, and that’s why we put the Innovation Hotel out there so we could get perception and reality to merge. So we could understand how people were thinking about it, and we could get the technical details together, and see if we had a gap between the two, such as, ‘Is there a communication problem on soap dispensers or is there something more?’

HD: Have you found a difference in what consumers are expecting from more high-end to mid-range hotels?
DJ: I don’t think so. Our consumer insight work tends to show that this is a psychographic issue, not a demographic issue. In other words, your 10-year-old in your house might be your eco-warrior as much as grandma.

HD: And what kind of energy savings are you hoping to achieve, or have you been achieving with some of these changes?
DJ: We’ve been doing the usual things like light bulb switches, and those actually do result in real savings, and towel on the rack programs, when properly executed, result in real savings. One of the big things we’re trying to do is just become much more systematic about implementing these changes this year. It’s a lot of work, but it’s not unreasonable to think of energy savings above 10 percent if you just do some things that are just smart, low-hanging fruit kinds of things.

HD: How has franchise buy-in been?
DJ: We’ve developed [Green Engage] in conjunction with IHI, our owners group. So in many ways we’re pushing against an open door, as the expression goes. They’re pulling us to get it done faster, not asking us to go slower. Everyone wants to know what is a green hotel and how do I get the cost savings, and we’re trying to answer those things for them in this.

HD: And what is a green hotel to you?
DJ: It’s a series of attributes; measuring and managing yourself to a set of internal guidelines that have been actually optimized to hotels. And based on our 4,000-estate experience this is what we’d recommend you do. And we did look at external standards too like LEED and Green Globe and others.

HD: Is there any time in the near future where you’re going to look at implementing LEED?
DJ: LEED’s a tricky one at the moment because it doesn’t have a hotel standard, and it is also in the U.S.—it’s hard for us to take the point of view of just any standard because we’re global, and regional standards by definition, sometimes are quite tricky. As you can imagine the Asia Pacific estate wants us to use the standards applicable to them, whereas the Europeans want theirs, and the Americans want theirs, and at the end of the day we wind up doing nothing. And we wanted to get past that, and get a point of view as to what we think is appropriate, and then just go do it. We are mindful and keep an eye on all the other activities, and maybe one day we’ll have a point where there is a standard that’s external to IHG that we can land on, but right now we just wanted to make progress and not get bogged down on discussions on regional standards. We design to meet all of them.

HD: How do you think the hospitality industry is doing as a whole on adopting green?
DJ: I think we’re all trying, but I would judge by our consumers, and I think our consumers are struggling to see anybody whose doing a good job. I know people are. But I think we all have a ways to go to prove to the consumer that we’re really doing something. Even though I’d like to say I think we’re doing good things.

HD: At this point is it in the doing, or is it in the educating the consumer?
DJ: If you don’t tell people what you’re doing that’s a missed opportunity because they want to know, but it’s a process. The way we look at it is that we want to make sure we have the CR ahead of the PR. I don’t want to run around saying I’m doing something that I’m not.

HD: Which many people have done and they’re feeling the backlash.
DJ: I’m always torn on this greenwashing thing, because at some level, I’m glad that people are at least trying. I think we tend to be very critical about things that we shouldn’t be. Towels on the rack programs for example—they’re hard to execute. It doesn’t mean it’s greenwashing, it just means it’s a hard thing to do consistently. It’s a path; certainly not a destination. We were at ALIS [the American Lodging Investment Summit] in San Diego, and one of the hotels was brand new, a very nice venue, and people were upset because they had water bottles. That hotel I’m sure does a lot of nice things, in terms of its design and impact on the environment, but because they had one thing that they hadn’t quite figured out how to manage, everybody was saying it was hypocrisy and greenwashing. It’s tough. Putting a hotel together involves a lot of pieces.

HD: Is there anything we should be doing to move it along more quickly?
DJ: I can’t decide for every business what their incentives are, but I would say that certainly for IHG, our understanding is that consumers care, and it makes you more cost effective. Those seem like two pretty good reasons to me.

HD: Do you think the economy is impacting guest values: people who maybe cared when they had the money to pay a little bit more, now are they singing a different tune?
DJ: You don’t have to charge more for it, although you certainly can. I do think just from the cost savings alone, it’s an accelerant; it’s really pushing us to do more, faster. There’s just so much opportunity out there, I’m not finding a lot of pushback. In fact, quite the opposite: let’s go save some money, and by the way save the planet too. It’s sort of a nice
eloquent thing. So whatever your reason for doing it, let’s just get on with it.

Dan Gilligan
Vice President
Energy and Environmental Services
Accor North America

The iconic American brand Motel 6 is being reinvented with a new green guestroom prototype being rolled out across the board, and a heavy focus on systems efficiency and green building principles in all new builds. With 900 properties across the U.S. and Canada, this could signal the end of the roadside motel as we know it.

HD: Green design seems to have seeped in through the luxury segment. What made Accor want to go green with a budget brand?
DG: For us it was an issue of sustainability. A lot of times people talk about sustainability and they talk purely about the environment, but really sustainability is how you sustain your business in this changing environment. We’re an economy chain, and it’s very, very important with rising energy costs that we strongly consider what we should be building in terms of a building shell. Once you put those walls up, and put the roof up, it’s a very expensive task to go back in and change aspects of it. So we took a very hard look at the shell, and then we also took a look at every one of the systems inside the hotel to figure out the best and most sustainable technology. For us it’s what can we do so the building will be profitable 20 years, 30 years, 40 years into the future.

HD: While you were looking at the systems, did you look at LEED or any third-party standards to guide you along?
DG: Yes, we used LEED standards as a guide and we looked at possibly LEED certifying the building, but the cost is extremely high to do that. And when we looked at it from an economy standpoint we decided at this juncture we would rather build as though it was going to be a LEED certified building, but take the funds for the certification and use them to actually upgrade systems to reduce the overall cost of the energy envelope in the structure.

HD: Are you finding marketing a challenge without the LEED stamp of approval?
DG: We’d love to have been able to say that we had a LEED certified building. But to say we built to LEED standards, as a guideline, we think is adequate for now. LEED is working on trying to develop some standards to make it more economical for chain-type customers like us to certify our buildings. It’s coming slowly, but it’s coming. And it’s going to be necessary for the entire U.S. what I call ‘chain environment.’ Anything from a Wal-Mart to a freestanding Starbucks. But it’s just a matter of time. There’s a huge amount of demand. Take the hotel industry. In the upper-end, there are quite a few people who have done LEED properties, but they’re properties that are very much dedicated to green, environmental, and there’s a lot of marketing around that. What needs to happen is that the whole standard needs to come down to the masses, the people that are building the huge volumes of square footage in the U.S.

HD: What differentiates the green Motel 6 prototype from the previous brand standards?
DG: We’ve always had very green standards. The properties have always been very efficient, but we went in and said to ourselves, ‘How do we need this property to be behaving 10 years from now? When energy costs are 20 percent more expensive possibly than they are today.’ If you’re in any type of economy business, the pennies add up. Utilities, next to labor, are the second group of expenses that we generally incur. So it’s a very important thing.

HD: You’ve discussed the focus on the shell and systems. Was there anything in the prototype on materials and sourcing?
DG: In the green prototype all of our lumber is from sustainable forests, and we’re not using carpet, we’re using wood flooring. We’ve looked at almost everything; you can’t get what I would call a green version of some certain types of materials, but we’ve used things like the stone in the sink, granite, and other kinds of materials that we historically didn’t. What we gain is not having to replace it at some point in the near future.

HD: And were there a lot of upfront costs associated with this?
DG: Overall? Absolutely. Even to the point where we’re going to have solar water heating systems. Thermo solar for heating hot water is not as common as we would like in the U.S., but it’s something that we think is a growing thing that we’re going to see more and more thermal solar, again. I say again because in the ’70s when we had the energy crisis there was a lot of thermo solar that was put out into the marketplace, and then unfortunately it wasn’t supportable.

HD: Solar panels on the White House and then they took them down right?
DG: Exactly. But we’re strong proponents of that, partly because of our European parentage. There’s a lot of thermo solar in Europe, and if you really think about as far north as most of the EU is, it’s not necessarily the best place for it. But the one big advantage they have there is a lot of competition, so the cost of doing the installs, is ofttimes less than it is here in the U.S. Actually, one of the hardest things for us is when we see new technologies that we would like to deploy, but until those technologies are really embraced it’s hard to get support. We suffer from a strong desire for other types of technologies; but you have to accept that you can find good vendors in some regions, but not in others. So you have to start regionalizing your thought process, and for a national chain, that’s a difficult issue.

HD: You mentioned your European parentage. Do you think that’s given you a jump on U.S.-based competition?
DG: Yes. I mean when you talk about Accor worldwide, being based in Paris, their view of the environment has been ahead of ours. In many respects they’re ahead of us. On our side, the one thing that we have as a huge advantage is that we’re so much corporately owned that we have the ability to deploy things very quickly. In many areas we’re ahead because we’re able to deploy a consistent solution for showerheads, for aerators, for air conditioning, make lots of changes and affect lots of
properties very quickly. The area that we’re furthest behind in, and it’s more of a U.S. issue, is recycling. Recycling is a much more standardized practice in Europe than it is here. But it’s been a great help having them kind of spur us along.

HD: What’s your strategy in rolling out the Motel 6 green prototype?
DG: The really strong green aspects that we have in the prototype, the shell that kind of thing, we’re not doing when we’re doing the prototype retrofit. We are going in and doing things to green up the property, though. The movement toward wood floors, the new sinks, some of the other kinds of things we’re doing internally in the new room. But we’re not doing a lot in the physical shell of the building. In some cases though, if we have a property and the windows are older, we’ll change out to Low-E glass; if the air conditioning equipment there is passed a certain age in its life, we’ll go in and in many cases we’ll replace that with the most efficient product currently in the marketplace. We’re looking at all of the systems that we can easily touch and making quick decisions as to if we’re going to do some of those things. But of course the room is what we’re really touching.

HD: So you’re 30 percent franchisee-owned. Is it easier to get franchisee buy-in for investing in energy efficiency with the current economic crisis?
DG: The answer to that is yes. The most interesting thing is when you start talking about each of these different elements we’re trying to put into the structure, you start talking about the return on investment. For the longer-term investor, that’s never been so much the problem, because they understand the longer-term economics. For the shorter-term investor, you have to get them convinced. And this is our role to get them convinced that these technologies, if they carry that cost, if they go out and borrow the money to build the facility and they add these features, they’re going to have a positive cash flow situation from day one. It’s like carrying the additional cost for a high-efficiency air conditioner in the mortgage of your house; the incremental cost may be an extra $10 a month, but if you’re saving $20 or $10 a month, positive cash flow. So we’re constantly trying to educate the franchisees, so they understand that most of these things we’re doing make total sense from day one whether you’re going to own that property for four years or for 40 years.

HD: Do you think green buildings will be worth more for resell?
DG: It’s hard to say right now. If we were marketing or selling a lot of these properties we might have a sense of that. Our perception is that the answer to that is yes. With a building that’s a lot more efficient, a lot greener, materials in it that are more sustainable, those are all marketing things. They can show them a lower monthly energy expense. The greener the building, the marketability of the building will be better at the time they go to sell the business. We definitely believe that’s true and will become more and more true over time.

HD: What impact do you think the new government will have on the acceptance of green building principles in the industry?
DG: They’ve already come out directly and indirectly in support of groups like [USGBC]. I think you’re going to see LEED or similar standards adopted into most of the building codes, and I applaud that. There’s so much of what is in LEED that is intuitive. It’s silly not to be doing these things, but yet the existing building codes in most of the country allow people to build buildings that are inefficient today and are going to be far more inefficient 10 years in the future.

HD: What are you most fearful of, and most excited about five to 10 years down the road?
DG: I said earlier, I’m still a bit fearful of the support of new technologies. If I have one other fear it’s a lack of clean power in the U.S. right now. I think we’d like to see a better solution than nuclear, but nuclear is still one of the cleanest technologies there is. Take it from our parent company in France. France is almost totally nuclear, and because of that they’ve been almost isolated electrically from these huge increases in fuel costs that have hit the U.S. and driven up energy costs. I’d like to see more nuclear in the short term, because you have to remember there are times when the wind doesn’t blow and the sun only shines 12 hours a day. Solar and wind are only part of the solution.
www.ihgplc.com/innovation
www.accor-na.com