The ISO 14000 Concept
The worldwide rush of opinion leaders, captains of industry, and thoughtful hotel patrons themselves to be seen to mitigate local pollution, address the continued buildup of greenhouse gases that contribute to global warming, and in general, reduce “carbon footprint” has forced a hard look at the cost and benefits of compliance. Sooner or later, the signatory-nations to the Montreal and Kyoto Protocol (the United States being a laggard in this respect) will roll out appropriate laws and regulations. Whether imposed by legislative mandate or not, businesses are bound to believe that environmental management is one more virtue (and cost) of corporate social responsibility.
Absent legislated standards, organizations can look to the ISO 14000 family of environment management and standards (EMS) for guidance. There are no hard and fast standards per industry. Instead, an EMS generally aids an industry (hospitality, in this case) a) pinpoint, measure and control its environmental impact; b) persist in continuous improvement; and c) carry out a systematic approach to planning environmental targets, attaining these and having measurable performance metrics to show for it (International Organization for Standardization, 2009).
The ISO 14000 toolkit includes 14001 (EMS Requirements), 14004 (guidelines for principles, systems and support “best practice”), 14015 (environmental assessment), 14020 to 14025 (labeling and declaration), 14031 (performance assessment), 14040 to 14049 (Life Cycle Assessment, consensus on goals prior to implementation), the 14050 lexicon, 14062 (optimizing environmental impact goals), and 14063 (guidelines for responsible communication).
Service Quality in the Hospitality Industry
The ISO 14000 banner is a useful shorthand for signaling conformity with universally accepted standards for environmentally responsible organizations.
This has both direct and indirect impacts on enhancing service quality.
Direct effects lie in creating both job and customer satisfaction. The former refers to reassuring staff, notably those younger and more environmentally aware, that the hotel chain or property is a conscientious “global citizen”. Pride in working with an environmentally aware organization contributes to job satisfaction and commitment, two factors vital to maintaining the core benefit in hospitality: the quality of service rendered to guests.
In turn, patrons increasingly attuned to “green” thinking learn about ISO 14000 conformity and thus gain an extra measure of satisfaction about their total experience with the hotel. This contributes, logically enough, to increased word-of-mouth referrals and the likelihood of return patronage (Feiertag, 1994).
Indirect effects have to do chiefly with chain image and cost management.
Environmentally sound practices sound a responsive chord with stockholders, media, opinion leaders in the community, and regulatory agencies. Public relations gains may elude easy cost-benefit analysis but represent a bulwark against disastrous mistakes and crisis PR management.
On the other hand, it is possible to reckon the costs and benefits of proactive EMS. A hotel that adopts measures to reduce environmental impact – maximizing the use of natural lighting and ventilation, automated temperature and light controls, sturdier insulation, waterless urinals, waste recycling, and resorting to renewable energy for at least part of total needs – immediately realizes cost savings. Such savings can be critical when managing for survival in a very adverse recessionary business climate. In more stable times, savings on power and waste management free up capital expenditures for property upgrades and additions that bolster competitiveness and sustainable advantage.
Practical Aspects of ISO 14000 Implementation
It is easy to see, of course, that reduced heat and effluent emissions contribute to a more sustainable and livable local environment. This proves strategic when the property is adjacent to, or right within a World Heritage Site.
At Cambodia’s Angkor Wat, one of the first World Heritage Sites, the pressure of rapidly-increasing tourism needed to be dealt with. Incoming visitors had rocketed from a nominal 6,000 in 1994 to 600,000 by 2004. Worried that the huge influx of visitors and the waste they generated boded ill for the structural integrity of hundreds of temples, the Cambodian Government Authority for the Protection and Management of Angkor and the Region of Siem Reap (APSARA) enlisted schoolchildren in the area to assist with waste management at two temples pursuant to the Plan-Do-Check-Act process that is central to ISO 14001 (Standards Australia, 2005).
Returning to the case of full-blown hotel properties that would like to undertake an EMS, there remains the matter of capital expenditures for an ISO 14000 project that financial institutions are ill-prepared to assess in the traditional balance sheet and ROI terms. These costs are considerable, notably when one accounts for all three principal stages of set-up, improvement, and maintenance (Tsai et al. 2003).
At set-up, provision must be made for installing a complete computer system, assuming the EMS can not be shoehorned into a hotel system that is essentially a reservation, housekeeping, and billing network. Next, there are labor costs associated with acquiring, getting training in, and accomplishing the initial ISO 14000 EMS standards. As the in-house specialists reach a comfort level with the system, they determine what benchmarks are in place for power consumption, waste volume, zone temperatures, computerized climate control, effluent, and waste management. And prior to implementation, and environmental impact analysis with respect to the environs (a World Heritage Site, for example) must be completed.
When implementation is launched, even greater capital expenditures are required.
The cooperation and teamwork of operating departments must be solicited, their staffs trained, and all the requisite monitoring and measuring equipment are canvassed, acquired, calibrated, and installed.
With the EMS intervention on stream, the commitment of the hotel chain and the property in question is tested yet again by spending to improve and maintain those very parameters given priority when deciding on benchmark measurements. If, for example, the in-house incineration of combustible waste is no longer tenable because it aggravates smog in the World Heritage Site, then the waste must either be trucked away to a landfill or burned in a cleaner way. The hotel incurs a marginal cost for trash hauling or capital expenditures to install an electrostatic precipitator in the incinerator chimney. This way, the hotel property meets its corporate social responsibility obligations to the surrounding ecosystem and ensures the sustainability of an environmental niche the UNESCO had decided was worth preserving.
After the initial stage of implementation, the hotel incurs out-of-pocket costs for certification by a third party, usually, the national standards organization, that the establishment has at least begun to fulfill the systematic monitoring and continual improvement that are the hallmarks of the international EMS ISO 14001 standard. And further down the road, there will be continuing investments in environmental improvement. It is hoped, of course, that these costs will redound to the hotel not only in goodwill by all stakeholders but also in enduring energy efficiencies.
Chan and Ho report the case of three Hong Kong hotels that found unorthodox solutions to the financing challenge (2006, pp. 203-316). The Shangri-la Hotel dipped into cash reserves to embark on an EMS project that became the model for all other properties to follow.
Ultimately, the pioneering effort in adopting EMS reaped lavish PR dividends for the chain. Besides being the first Asian hotel to qualify for ISO 14001 certification, Shangri-La earned plaudits from external stakeholders and, even better, gained a competitive edge with discerning international travelers (Tsai et al., 2003).
Having no environmental impact benchmarks available for an Asian and highly urbanized setting, the flagship Shangri-La property decided to employ as benchmarks the collective “best practices” of each line department.
Funding this transition to ISO 14000 compliance appears to have come to form a combination of free cash flow from operations and proceeds of a convertible bond issue totaling US$258 million.
Two others, Nikko and Grand Stanford, made creative use of alliances with a university’s engineering department, a hotel management school, environmental societies, incentive funds from the local government, and trade associations to plan and implement the EMS while minimizing out-of-pocket costs.
Conclusion
Implementing and publicizing compliance with the ISO 14000 family of standards is one concrete way for the hospitality industry to signal common cause with the universal outcry for stopping global warming and environmental degradation in its tracks. Any hotel property also reaps internal dividends in two ways. First, there is the morale of a workforce energized by an upstanding reputation in the community for being among the first to have an EMS. Second, the establishment can generate positive ROI sooner or later from savings in waste management and energy consumption.
For hospitality properties situated within World Heritage Sites, every EMS measure applicable in densely urbanized properties must also be implemented. And there is the additional mandate of outward-looking EMS. Besides the obvious steps of controlling gaseous and liquid effluents that might despoil the surrounding ecosystem, a hotel would do well to marshal the cooperation of tour groups and FIT guests lest they thoughtlessly dispose of their trash and otherwise vandalize the World Heritage Site.
References
- Chan, W W & Ho, K 2006, ‘Hotels’ environmental management systems (ISO 14001): Creative financing strategy’, International Journal of Contemporary Hospitality Management, vol. 18 no. 4, pp. 302-16.
- Feiertag, H 1994, ‘Boost sales with environmental-driven strategy’, Hotel and Motel Management, vol. 209, no. 2, pp. 8-17.
- International Organization for Standardization, 2009, ISO 14000 essentials.
- Peglau, R & Baxter, M 2007, A decade of ISO 14000, ISO Management Systems, Geneva.
- Standards Australia (2005) ISO 14000 for world-famous tourist site.
- Tsai, T, Chan, L, Chou, K, Schultz, M, Heike, F, & Yeung, K 2003, ‘Island Shangri-la’s environmental management system: A long way to go!’ Asian Case Research Journal, vol. 7, no. 2, pp.173-94.