Host: Welcome to another addition of Deloitte Insights, a production of Deloitte LLP. Deloitte Insights is an audio news podcast that looks at important business issues. Today's program - The Greening of Hospitality: Why Hotels are Becoming Eco-Friendly.

No color has more cachet these days than green in its new role as the symbol of the environmental movement. But lest we forget, it’s still the color of money. And in the hotel industry, green will soon come to symbolize both at the same time. As many industries are learning, environmentally sound practices can also attract new business and reap more profits. The same people who are trying to cut down their use of energy at home expect the same from hotels when they travel. And more consumers, whether they're on the road for business or pleasure are using green as their guide when choosing a hotel.

But the hotel industry is still trying to find its green identity. Too often there's a chasm between what customers want and expect from eco-friendly lodgings and what hotels can deliver. So the industry is increasingly relying on its own customers to find out what eco-friendly features travelers prefer so that hotels can incorporate them going forward. But going green doesn't come cheap and it's much harder to do than simply changing light bulbs from incandescent to fluorescent. Many customers may bulk at paying for the extra features. Still for the growing numbers of travelers who want to do their bit to save the planet checking into an eco-friendly hotel may be the best way to go.

Here today to tell us about the extreme green makeover the hotel industry is undergoing and why it will bring in more customers and boost business are Adam Weissenberg and Neale Redington.

Adam Weissenberg is a vice chairman and the US Tourism, Hospitality and Leisure leader for Deloitte, LLP.

Neale Redington is the national partner in charge of Hospitality for Deloitte Touche, LLP.

Welcome to Deloitte Insights.

Neale Redington: Thank you. Glad to be here.

Adam Weissenberg: Thanks. Glad to be here.

Host: In the past and eco-friendly hotel might have been a mountain lodge where guests recycled their trash. Obviously things have changed. How would you define a green hotel today?

Adam Weissenberg: I think today when you look at a green hotel there's going to be two ways to think about it. First is from the operational side and there's a new certification out there called LEED (Leadership in Energy and Environmental Design), which is put out by the Green Building Council and there's various levels within that and hoteliers are going to achieve that operationally whether it's platinum, silver or gold based on how their hotel is put together.

I think on the other side is also what the customers are looking for and being able to provide services that the customers want, which are going to be more eco-friendly then they were in the past.

Neale Redington: I'd agree. There seem to be the two aspects, as you say, the building side, the actually development side and then the operational side. My kids have been telling me fairly regularly now, reduce, reuse and recycle. I think you can take all three of those pieces within development and those three pieces within the operational side. So the reduce aspect is typically regarded in terms of a footprint so perhaps you'll have less impact on the environment in terms of how you build out the property. Reuse, I think there's a lot of sustainable material that could be used now. So to extend the bamboo floorings being used, I know that's something that's particularly picked up. And then the recycling side, to the extent that they can use rubber or steel, I think there's certain pieces of steel that are used in the hotel now that are recycled.

That's on the development side and then when you get to the actual operational side you can look at the reuse of water. I think a lot of the laundry facilities are looking at some form of reuse of water. And reducing is what I think most people see in terms of a green aspect from the hotel room, which is reducing the amount of bedding turnover or linen that needs to be used or bathroom goodies, whether that be just use of towels or using the shampoo less. I think some people have noted that on our survey that they'd like to try to do those things.

Host: When did the hospitality industry begin to go green and why is the trend gaining momentum? 

Adam Weissenberg: I think if you looked at the hospitality industry a couple years ago everyone would say this was a fad. Green's not going to stick with us. There's a couple people on the fringe who want to go stay at some hotels made out of paper on some desert island with no toilet paper. And that might be the definition of the extreme green. I think since then the industry has woken up in the last year or so, particularly in the last six months, to realize that this is something that's going to be here for a long time and they need to think about ways to be environmentally friendly.

What's driving that, I think is, one, the price of oil clearly had a big impact on everyone's cost. Two, is the global warming out there where - whether or not we can attribute our actions to that. Everyone has felt the effects of the changing in weathers and some of these storms and tsunamis, etc., that I really think there's much more awareness of it. So when you put all that together I really think now is the time where everyone is saying we need to think of a way to be green and we need to take part in this and it's here to stay.

Neale Redington: I think what we certainly, in our research, have concluded that it's here to stay, the consumer, I think, is pushing this and to some extent the hospitality industry has been behind, as Adam says, there really wasn't - it was more eco-friendly as opposed to green. So there may be eco-tourism or eco-hotels but from a green standpoint there was really very little focus in that area.

So now the customer is demanding it from one standpoint and then the developer is looking at it, as Adam said, in terms of coming up with utility savings or such. I think the hospitality industry actually has always been pretty good in terms of trying to minimize the amount of energy consumed in a hotel room. If you look at the lack of lights you always used to have in those hotel rooms you'd be pretty sure that they were trying to save energy there, with just not being able to see when you walked in the door.

Adam Weissenberg: It is interesting, you talk about the customer side and we did do a survey this spring where 95% of the people surveyed said that they felt hotels needed to be more green. So when you look at that and you say to yourself, okay, if you're a hotel management company or a hotel owner, clearly our customer wants us to do things differently now and become more environmentally friendly where in the past you could have said, well nobody really cares about this issue, they do. So I think that's a big change. It's here today. It's going to be something staying with us for awhile.

Neale Redington: And our survey was with individual customers and they're also a pretty - I don't know if militant is the right term - but just a very activist or group that's out there now who is looking for social responsibility in the hotels. So to the extent that some of the large pension plans are either investing in properties or sending groups to a meeting then they expect those hotels to be green. Now, not quite sure what green means, I don't think anyone's really come up with a definition as to what type of certification they want from the LEED standpoint or some other equivalent or in terms of their operating practices how to define that. But there is an expectation when they're going to a hotel they do have a short checklist that each of these groups are now developing to ask whether the hotel has considered becoming green or is green.

I think that has a couple of implications. One, is that if your customers are demanding that then hopefully there's a way that you can charge more for that. You're making these investments in order to stay in the game. You're not getting ahead - you might be getting ahead for a short period of time but over the long term I think they'll have to do this in order to play in the game.

Adam Weissenberg: Yeah, and I think what you're talking about a little bit is the demand coming from the business traveler where, exactly what you're saying, from talking to large corporate travel departments where they are now saying, okay, one, our internal customers want to know is the hotel green, environmentally friendly, maybe having a little green checkmark next to the website and when you click on that particular hotel - you're also saying for planning meetings they're going to start to say it's part of the contract. Is there certain green policies you have in order to be a purveyor to deal thus as a large corporate customer?

Neale Redington: A green mandate effectively.

Adam Weissenberg: A green mandate. And there's certain states we've heard have already mandated that, the RFP's (requests for proposal) for the hotel suppliers for their states will have to meet certain green standards. So clearly looking at all that the industry is kind of getting a lot of pressure to become greener and more environmentally conscious.

Host: How well is the industry doing in meeting those needs?

Neale Redington: I think they're moving along slowly. And I think that it's, at the moment a lot of people are looking at the cost of this as opposed to the revenue potential. So when you look at the potential either new build or the retro fit aspect of a development, I think those are rather slow. I would say, and Adam already identified the two different aspects of this, one is the development side. On the operational side I think the organizations are moving more quickly in that area. But I think that that really needs to step up to the next level.

During our survey we did make note a number of our respondents had said that despite the fact that they had ask for a certain thing to happen, so please do not wash our towels, please do not change our bed linen, then in a number of situations that was not done. So I think there's a lot of talk at the moment. I think the practices need to follow through on that.

Adam Weissenberg: Yeah, I think the customers would say at this point that, and our survey supported this, the industry is unfortunately maybe perceived as having more lip than action. I think the big companies have all appointed heads of sustainability now and are getting with the program and looking for ways to become more sustainable. But it's more knee-jerk probably than thinking into the future and that'll be the next step, figuring out the strategy. But, I think they all have to get to a certain level.

We have heard good things happening where a lot of the big companies have looked at their waste policies, looked at their energy policies, looked at their water conservation policies, which I think are some of the key, and as Neale said, on the cost side. But what they really haven't done yet is start to look at it on the customer side and saying, what are the things that our customers want. And maybe having low energy lights, that's good, and maybe having automatic thermostats, that's good, but they really haven't gone down that side of the road as much as they probably would like to.

I also think they've begun to have discussions with their suppliers, which is a good thing. And I was told this story from one of the big companies, their head of sustainability that they were looking at the number of pens they purchase each year, and they buy something like three million pens a year and these pens get thrown out and they're working with their pen supplier to come up with a sustainable, recyclable pen. Great example of coming up with kind of a win-win but taking it to the next level which is working with their purveyors and looking for ways to be green.

Neale Redington: So I think part of the challenge is that the service aspect can be modified and has been. But I think until there is some capital investment to support that to the extent that you are going with the better type of more efficient buildings. There was a new build that I was in probably six months ago over in Asia where you put your key card into a slot and that activates the lights, the AC (air conditioning) and presumably other things that I hadn't thought of, but basically the lights and the air conditioning in the room. And obviously when you leave your room you take your key with you, so everything shuts off at that point. So I think examples such as that are fantastic because you really are regulating the in-room use but that was with a brand new build of a close to $5 billion resort. So it's not going to happen - it has to happen with a new build. It's not going to be something that is easily done in terms of retro-fitting or some of the smaller budget properties.

Adam Weissenberg: And that's a big investment and the technology is much better today. I know in the past some of the smaller budget chains had that type of service but that was great when you checked in on like a 40˚ day and the heat wasn't on or you checked in on a 100˚ day and the air conditioning wasn't on and it took you three, four hours to get there, that just wasn't going to work. So I think the technology has come a long way and the HVAC to support that.

But your point on investment is true, these companies need to make investment today and there's been a struggle between the owners of the hotel potentially and the management companies in terms of who's going to make that investment.

Neale Redington: We recently did a survey with Charles Lockwood, which was looking into the dollars and sense of green retro fits. And I think there is a perception that there is a significant cost that needs to go into either a green build or a retro-fit and obviously a retro-fit is incremental dollars because you're starting with a hotel and you want to do something in addition to it. But the Charles Lockwood and our report had some pretty compelling observations in terms of the cost savings that have developed in terms of both payback time and IRR (internal rate of return). And I think there was one example of a project that was done in Silicon Valley that had a nine and a half month payback in terms of going through and working on the electrical, the water and they were able to come up, as I say, with a nine and a half month payback, which I think is fantastic.

Adam Weissenberg: Yeah, that's great.

Host: If business travelers believe hotels should be doing more to become green can the hospitality industry give them the green hotels while still providing them with all the creature comforts they've come to expect? 

Adam Weissenberg: That's an interesting question. I think that's the argument that the hotel industry used to use to why we don't, we as an industry don't want to be green because everyone expects to have these luxurious services and we can't take those away. But I don't think that's the reality and I think the hotel industry today is recognizing that. There was perhaps - I'm as guilty as the next person - kind of when you went on vacation this kind of waste, where you'd leave the bathtub running or you'd leave the lights on or you'd turn the air conditioning down really low and sit there with the balcony door open or use new shampoo every day. But I think now what's happened is even at a luxury hotel today people are much more aware of the environment, people are much more concerned about recycling, saving and it might depend on the demographics but in general I think there's a much more awareness of this and I don't think anyone's stay is going to suffer if the shampoo lasts for two days, if the air conditioning is left at a more reasonable level and you don't leave the door open, if your sheets are maybe washed every two days rather than every day. I really don't think that's going to be any sacrifice in terms of level of service. So you can still have top end luxury type of experience and be environmentally friendly today.

Neale Redington: We saw a pretty interesting segmentation, Adam, if you recall in terms of the baby boomer versus millennial. I thought that was quite interesting that the baby boomer is most likely to take steps to be more environmentally friendly whereas the millennial is less likely to do that as long as someone else takes care of it for them. So I think to the extent that you're looking at a customer and you try to segment that type of approach I wouldn't be surprised if the millennial goes to a five star resort. They'll just pay for somebody to take care of the green issues. It's almost like buying the carbon credits, I'm not sure that actually accomplishes anything other than paying for your sins. So I think that perhaps if you're segmenting this look at the baby boomers and they are more likely to be the folks who would want to adopt some of those practices. I think if you look at the millennial customer it probably needs to be something that's back of house. So if you're recycling or reusing the water in the laundry or if you have some sustainable food service program, locally grown, organic purchases, those types of things that they really don't get to see or don't have to - it doesn't impact them in terms of day to day pampering at the hotel, I think that may be a factor.

Adam Weissenberg: I think I looked at it a little bit differently in terms of the fact that what you're talking about where it sounded like the baby boomers were much more likely to be environmentally friendly when traveling versus the millennials and the Gen-X's and Gen-Y's, as we call them. I kind of looked at it saying, okay, the baby boomers have kind of lived through this era of non-environmentally friendly hotels. So they're willing to say, okay, in order to make things happen we're going to have to take action and we're going to have to do things ourselves. And that's why the survey would say, okay, we'll turn off the lights, we'll turn down the air conditioning, we'll push the hotel to have environmental policies. While the Gen-X's, Gen-Y's, in my view, I think they think it's just table stakes. I think their view is that every corporation, hotel should be environmentally friendly and should have policies in place and should be working as hard as they can so their expectation is either you do that or I'm not going to stay there. I don't have to do anything versus the baby boomer will do something. I think Gen-X/Y's are saying, you either do it or I'm not going to stay with you. So that, to me, was kind of the difference. I 100% agree with you, because they already expect you to already have all those things in place that they can say to you, okay, you as my customer we're doing all the right things. I don't know if you agree with that but that was kind of my view.

Neale Redington: I understand that. This is a given, don't put me out, that's true.

Host: Okay, we have a pretty good idea of what travelers want from a green hotel. But apart from turning out the lights when they leave their rooms is there anything else they can do for the environment during their stay?

Adam Weissenberg: I don't know if we really have anything substantial there that we haven't already talked about. I think when we were just talking a moment ago we were mentioning that things like turning out the lights, things like conserving the water, that's probably the most travelers can do. And I think travelers will do those things and we saw it seemed to be the baby boomers would do it more than others. But I really think it's more along the lines of people have expectations of the hotel companies, and as we said earlier 95% of them want hotels to be green, which is an important piece to note here.

Neale Redington: I'd agree with that. I think it's the things that we'd covered already in terms of actions and then it's generally just supporting those green hotels. So to the extent that somebody goes green and potentially there's an inconvenience, potentially there's a higher fee, a higher room rate then to support those in terms of going to those properties, I think. The only other thing I can think of is walking to the hotel instead of taking an airplane, which is -

Adam Weissenberg: Horse drawn carriage.

Host: Just how big is the gap between what travelers expect from an eco-friendly hotel and what the hospitality industry can realistically deliver?

Neale Redington: At the moment there's a pretty significant gap between what is being delivered and what the customer wants. I'm not sure how to look five-ten years out. I would expect that there would obviously need to be some pulling together of those two aspects. So I would think over time probably some of the customers’ expectations would mellow a little bit and the hotels would work out what really makes sense. From the hotel's standpoint it certainly focused, at the moment given the current economic situation, on the reduction in utility costs. I think that's their main focus at the moment and to the extent that they get brand awareness, a good brand name as a result of doing some of these green projects. I think that that's probably the way they're going to try and move this forward.

Adam Weissenberg: I think the customers don't perceive the industry as green as they would like. I think the classic example everyone talks about is the little card in the room that says, leave your towel here on the towel rack and if you do you're helping out the environment. That was kind of like, everyone was like, that's ridiculous. That's really not going to do much to save the world. I think that kind of gave this negative perception to the hotel industry because that got a lot of play versus - there's much more the industry is doing now. As we started off by saying, I think today, the last six months industry has really woken up, is really trying to be much more active. We've heard of brands being announced that are going to be completely LEED certified, environmentally friendly. And going forward that's going to become more and more the norm so I think the gap will start to narrow but today clearly there's still an expectation from the customers that they want more out of the hotel industry then I think they're doing but the hotel industry is starting to address that.

Host: Is this gap due to a lack of uniform standards when it comes to green practices? 

Neale Redington: I think it is. We say around the office that defining green, there's no black and white way to do that. But I think it's very difficult because none of the groups, nobody knows how to define a green hotel. I think a number of the online Web groups now who have a green tab really don't have a way to actually define how you get onto that green tab. If a hotel volunteers that they're green then they automatically get onto that tab. There are no checks and balances related to that. I think that's a challenge, which rolls over to the customer. The customer doesn't trust the green certification at the moment. Then there's this concept of green washing where the customer really doesn't know when they're told that something's a green hotel they don't know whether that's really the case.

Adam Weissenberg: I think that's a challenge similar to what's going on with the star systems of hotels. What's a four star hotel anymore? What's a three star hotel anymore? What's a green hotel? There's so much information out there and yet there's no real standard. So, I think at this point probably the customers are going to be looking for as much information as they can and there are some Web sites where they can look and evaluate which hotels are greener than others looking at other customers' experiences. But it would probably help if the whole industry went to some kind of uniform system that could be audited, that could be checked and then used as a basis for determining what level of green you are. That will ultimately help the hotel companies because they'll be a standard in place.

Neale Redington: Clearly that has happened in terms of the development side. As Adam mentioned earlier, the LEED certification has been very significant and really has been embraced by the community. I don't know whether they could have a same - they would probably need to have a similar type of format for a hotel operating practices as well as the actual development process.

Host: Many hotels think that they're officially green after tinkering in retro-fitting but they're really not. So just what are the pitfalls of transforming hotels into environmentally friendly facilities?

Adam Weissenberg: I'm not so sure I would agree with saying that hotels have tinkered and they're not green. I think most hotel companies are making honest efforts when they put some policies in place to be green. So I do think that even though our survey showed there's somewhat of distrust, I do think the industry in general is not trying to create that image. I really do think that they want to do things that are sustainable and add value but it's a challenge because you have to come across as being sincere about this and so I think what the companies have started to do is put public relation positions in place and tie that into their whole environmental sustainability practice so that they can promote themselves as more than just lip service and show the real things they're doing. They're probably not getting credit for as many of the activities that they have in place.

Neale Redington: I can't think of too many pitfalls. I think Adam talked about, earlier, the hotels made out of paper, that might be a bit of a challenge. So I guess you have to select the right materials if you're selecting a sustainable material it needs to be something that'll last a while. I guess sustainable means that it should last but I think it also means the way that it's harvested typically. So I think there's an aspect there to make sure that the place isn't going to fall down but that's not really a significant issue.

The other issue, tieing back to what Adam said, is really, the pitfall is if you say you're green and you're not. And it ties back into the brand and the marketing and the PR (public relations) that you need to be able to substantiate your green claims. And if you can't, I think that's where you're really going to run into some issues because you've probably developed an improved brand awareness, improved brand perception and then to the extent that something went against that, that really would damage it.

Adam Weissenberg: Yeah. I do think it's funny, thinking a little bit about the pitfalls. One concern there would be fads because we've seen that knee-jerk reactions can have broad implications. There's what's going on now with corn where all of a sudden everyone turned to ethanol and it created this huge problem with feeding the rest of the world. So, if I'm a hotelier and someone came into me and offered me a laundry machine that ran on corn and my knee-jerk reaction was to buy that, I might be in trouble a couple years from now. So you probably want to stay a little more mainstream in terms of the ways you're looking to be sustainable rather than be on the cusp if it's a fad and it's not something, that, as Neale said, that's going to be sustainable and then hold on for a long time.

Host: Going green should lower costs in the long run. But what about the cost of going green in the short term, both to the customer and to the company? How can hotels go green, make money and stay affordable? And are travelers willing to pay the price for being green? 

Adam Weissenberg: Well, yeah, I mean, the simple answer is no. So the travelers don't want to pay a lot more and we've seen that in surveys. The majority of them continually say their expectation is not to have to pay anything additional even though companies - they expect companies, as we said earlier 95% of them want then to go green. So is there a way for companies to make money?  Well, I guess there's two ways to look at it. Once again, one is, yes, on the cost side being green, especially if you're doing a new construction and getting tax incentives and looking at certain municipalities that are offering you kind of incentives to having those areas, looking for ways to save energy cost, that's all kind of a short term. But I think the bigger question is if you don't go green and you don't invest in it are you going to be at a competitive disadvantage down the road? And the answer is yes. So you can say, great, I'm not going to invest any money today and the guy across the street will and then two, three years from now all of the travelers going to go across the street. And that'll happen because people will say, you know what, I'm not going to pay anymore but I'm going to pick the two hotels, even if they're charging the same, the one that's the green one. So they could be at a competitive disadvantage even though you're not going to get any extra revenue today from the fact that people will stop going to your hotel. That's maybe a little drastic way of looking at it but as we talked about it earlier business travelers in particular their corporations are saying to them, here are the people we want you to do conferences with, here are the people we want you to have meetings with, here's where you can click to see which of the hotels have better environmental policies than the other, and that'll start to drive the behavior of the hotel companies.

Neale Redington: Adam, I might take a slightly different slant on the data that we received. And I know that I think it was 60% of the people said that they weren't willing to pay more. I guess my cup's half empty. I was going to go with the 40% of people who are willing to pay more. So I think that there is a potential opportunity there and I think some of the folks actually were willing to pay up to 50% more when we asked the question. So I think there is some revenue potential there. I recognize the fact that, yes, the majority isn't going to pay but you do have at least those people round the margins that will pay more.

I would look at the payback example that I just described back in Silicon Valley where you were looking at something like eight and a half or nine and a half months to get a payback on doing a retro-fit. So that's one aspect. In terms of the new builds there's been suggestion that it's not more than 10% extra to do a green build. And I think there's a little bit of the fear of the unknown. People haven't done it so they just say, oh, it's bound to cost a lot more. They just haven't really gone through and analyzed it. I think you're looking that in the context of a huge run up in construction costs over the last three, four years. And if things have been going up 20-30% and then you're looking at the next year and say, okay, I’m going to do a green building and it's gone up 20-30% well how much of that is really because it's green and how much is because of the overall construction cost increase. I think there's a little bit of noise in terms of the system when people are trying to evaluate how much it costs. Look at the increase in the cost of steel. I think I've heard of people now thinking about using bamboo for scaffolding and it really is the situation now where it actually could be cheaper to start using some of these sustainable materials rather than the things that have really gone up in price over the last few years.

Adam Weissenberg: Yeah, no, I think your example of the nine month turn around in terms of recouping the cost - I do think the investment going green has come down. I do think whether it’s detergents are cheaper now. One is if there's a lot more demand for environmentally friendly products than the price comes down on those and I think that is happening, whether it's the light bulbs you're using in the rooms, whether it's the detergents you're using for the dishwasher, whatever that is. So that makes them more attractive. But the issue you mentioned, which is unfortunately today we're in this kind of period uncertainty just on the economy today, which is clearly causing some impact to our industry even though the hotel industry does seem to be holding up fairly well. It's kind of interesting that the industry is getting punished for not growing as much as it used to as opposed to, let's look at retail or some of these other industries that are actually having negative earnings. But having said that, you're right. So if you're spending 20% more on construction this year do you really want to spend 10% more on that to be environmentally friendly? That's a tough decision. Or if you're spending 30% more on your food because the food prices have gone up with everything else and now you want to be organic or whatever that is and spend another 10%, 20%, 30% on top of that and you may or may not be able to recoup all that in menu prices. It's a tough decision.

My view would be the hotel industry should do it though because of the long term impact and the building of customer loyalty is just important to do today. This is a short term trend in the economy, is my view, and they should continue to invest in being environmentally friendly.

Neale Redington: I think when you try to pull this back to dollars, ultimately everything needs to come back to dollars, but I think there's a couple of different routes. One is the immediate cost saving because your utility price went down. Two, is people spend more this year in your hotel. But there's probably two other aspects, one related to brand, one is in terms of brand with the customer and that more people, as you say, will become loyal to that type of a product. The other side, the hospitality industry, as with most service industries, has a huge turnover issue. And to the extent the folks building LEED certified properties with the expectation that they can retain more people, I think that this type of a green branding with a green hotel probably will result in better retention. So you're looking at a cost savings over the long term in that area as well. So I think it's more than just the short term aspects that you're looking at. There's certainly some long term benefits out of this.

Adam Weissenberg: Yeah. I thought you were going to talk about the retention in terms of training because clearly I think one of the challenges right now is getting good employees and then you train them, don't change the sheets every day, don't change the towels everyday and then they quit and then you get the new person in who doesn't know that. You have to go back and say, wait a second here's all of our environmental policies and training you again and changing someone who's been a housekeeper for 20 years in terms of what they've done when they come to your property. That's another big challenge for the industry.

Neale Redington: True, but I guess if the housekeeper's been changes the bed in every room for 20 years and now they only have to do half of them, they would be quite happy with that.

Adam Weissenberg: Yeah, I would think so.

Host: Even though there's ample evidence that the sustainability movement is here to stay, how do you respond to critics who say it's just a fad and that customer's desire for eco-friendly hotels will be fleeting?

Adam Weissenberg: Well, I think as I've said earlier, clearly not a fad. Maybe it used to be, but if that's your views on it you're going to have a tough time running your hospitality company and be in for some rude awakenings. But I think the hotel industry in general has, as you said earlier, embraced it and maybe the hotel owners still need to come a little bit further just because it's mostly the dollars coming out of their pockets in improvements, but it's not a fad. I mean everyone reads about this every day. There's so many articles whether it's about what's going on in the global environment and whether it's about cars that are becoming more green, whether it's about airlines and ways they're looking to save energy. So this is just top of mind for everyone that it's here forever and it's only going to be in different phases going forward. And I don't think it's going to be - okay, two years from now we've achieved greenness and so we can all go home now. That's just never going to happen. It's going to continue to evolve and they'll be newer ways to look at this going forward so it's a trend not a fad.

Neale Redington: I'd agree with that. I think we had a comment in our analysis on the staying power of sustainability saying this isn't a goal unto itself. It's really a change in operating model. Interestingly enough one of the major players in the industry who's trying to go green said he's really trying to change the operating model. I wouldn't be surprised if that ties in a little bit with the green aspect just trying to look at operations differently from a green standpoint.

The other side of this is really looking at the global aspect. This is a global industry and we've read plenty of books about how the world is flat and things are becoming more globally expanding, people have reached around the world. We actually had a big hospitality conference in New York where we had a number of our colleagues coming from around the globe. And it was interesting to hear some observations from our UK folks around how green they thought the hotels were. They were grumbling about how the lights were on, the air conditioning was blowing out into the street and really some interesting observations. I think perhaps in the US we have been a little bit insulated from some of the green movement and I think some of that may be political. But as you look at certainly the European folks really have been very focused on this. So if you look back from a global perspective I really think it would be very difficult to say this is a fad.

Adam Weissenberg: Yeah, and to that point, Europe for a while now has regulations in place and laws around what companies need to do. So they're used to it. I guess the challenge is going to be Asia, which is going through the expansion we went through 100 years ago with all the same issues of smog and coal burning and cars coming into play and so forth that that's going to be the challenge to spread it. But the US, I do think was behind Europe.

I think the other piece of this is you look at the young kids today and I just got my ten year old daughter who comes home and yells at me for having the car idling, who calls me a green tip loser because she gets a green tip every day in school that I am not following. So you look at kids - we never heard anything about this stuff when we were in school, however many years ago that was. Clearly the younger kids today they're growing up with this and it's going to be just part of their life.

Host: Some studies have shown that women tend to be greener than men. Baby boomers are more actively green than Gen-Y's and Gen-X women are the greenest of all. Should hotels try to promote their greenness to different demographics? And if they go that route, why stop with gender or age, why not race or religion? 

Neale Redington: I think I'm going to stay away from the race and religion part of it. There have a number of hotel companies that have talked about lifestyle and psychographics, which is one of my favorite words in the industry, and moving away from the demographic aspect as you describe. I think the psychographic concept is how do people feel, and they really try to work towards that type of a customer. So you don't need to appeal to the 60 year old white male. You appeal to the person who's active and feels like they're a certain age, those types of things. I think that, yes, you can look at those different segments but I think you're really looking at this lifestyle aspect and to the extent that people are interested in green and you've seen that from the research, then I think you start to move towards a green brand, or if you want to take an existing brand and highlight some of the green aspects I think you can do that. I would certainly agree with you that you're not going to focus specifically on any type of a demographic. You're really going to be focused on how people feel about these things.

Adam Weissenberg: I think there's been some niche marketing going on for awhile now, which is the eco-travel and the adventure travel, which would probably fall under the same category whether it's running with the hyenas in Africa or whatever it is, but I think there's clearly a niche. And that's a growing niche where people are looking for those experiences but the broader question for the day to day business hotel or leisure hotels, there probably isn't that much differentiation in terms of what they should be doing in terms of trying to go green. I think it's getting ahead in what the green sustainability policies are, promoting those so that people know on your Web site for hotels and your community that that's what's important rather than just looking at a specific demographics.

Neale Redington: I think if you're looking at this in terms of the short term versus the long term it probably does make sense to the extent that you've highlighted some groups who are going to be more interested or more likely to come to your hotel. Probably in the short term you want to make sure that it pays off and get a good start to this process and you probably want to highlight your service delivery to those people. But I think over the long term, as we've said, this is table stakes and everybody's going to be there so there's no point in really saying, okay, we're just going to market to these particular people.

Host: In closing, maybe you could speculate about the future of green hotels and what the hospitality industry will look like in five to ten years.

Adam Weissenberg: Have you seen The Jetson’s before? I would say clearly we're heading down an exciting path right now. I think the industry is kind of at a cusp of changing how hotels are going to be designed, and Neale's talked a little bit about that, and with one brand in particular. He's saying that they're going to have all their new properties LEED certified. We're going to see much different types of products out there in terms of how they deal with their energy, in terms of how they do their waste, in terms of how they recycle their food and beverage, in terms of the thermostats and so forth in the rooms. So I do expect five years from now your traveling experience will be different in that things will be much more environmentally friendly. Companies will be much more sustainable all the way from how they're constructed to how they run their operations to how the guest experience is. So that's what I look forward to and I think that'll be a nice change.

Neale Redington: The five to ten year horizon is where you have a significant opportunity for capital improvement. So to the extent that you can invest the capital I think you're going to get some good savings. I think the service delivery aspect is something that we've already seen becoming implemented but I think it needs now to be supported by the capital improvement. I think the combination of the two will have some fantastic green hotels.

Host: Thank you both for joining us today on Deloitte Insights.

Neale Redington: Thank you.

Adam Weissenberg: Thank you.

Host: Visit www.deloitte.com to find The Staying Power of Sustainability: Balancing Opportunity and Risk in the Hospitality Industry, which served as the basis for today's discussion, as well as articles, newsletters and other information of interest.

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