Growth vs the green agenda27 September 2012
Fairmont’s experience has shown that sustainability and luxury can go hand in hand. President Jennifer Fox talks to Rod James about whether environmentally friendly practices can survive in the face of rapid global expansion.
It is interesting to note the evolution of the term 'emerging markets' in relation to luxury hospitality. Once a category that covered the BRIC countries, it is now clear that these countries have well and truly emerged. High-end chains are expanding quickly, with Fairmont Hotels the latest to announce an aggressive growth programme. For the brand, and its president Jennifer Fox, growing in a sustainable and environmentally responsible way will prove an interesting challenge.
There is still debate over whether the concepts of luxury and stability go hand in hand. Schemes that involve the guest to take action - for example, choosing not to have fresh towels every day - have often proved unsuccessful. Fairmont is one of the few luxury brands that can claim to have solved the conundrum. It has an entrenched, all-encompassing sustainability programme that has proved a competitive advantage with its customers.
Portfolio to expand eastwards
To a degree, this has been facilitated by the group's relatively limited geographical spread. Of its 64 existing and under construction properties, 44 are in North America and the Caribbean, allowing the green message to trickle easily from the top, down. The company was a late entrant into the Chinese market, opening its first property in Beijing in 2009. Fairmont's presence in Asia amounts to just nine hotels.
The company is now embarking on an aggressive programme of expansion, which will see its portfolio expand to a minimum of 75 properties by 2014. Its main focus will be the Far East, with high-profile openings planned in Hyderabad, Nanjing and Jakarta.
"I spent ten years at IHG," says Fox, who came to Fairmont in November 2011. "Before that, I had 13 years with Starwood [formerly ITT Sheraton], so clearly I take careful consideration before I move. I thought Fairmont was a great brand, with some of the most iconic, historic hotels in the world. It is very strong in the North American market and interested in expanding; over the next five years our focus will be on key markets throughout Europe, Asia, the Middle East and Africa, while also strengthening Fairmont's position in North America."
Fox's move from the world's largest hotel chain to a more focused high-end operation such as Fairmont raises some interesting questions. It is clear that her experience in a global, ever-expanding business will help Fairmont with its growth plans, but is there a risk that growth could reduce the potency of a particularly innovative sustainability strategy?
In 1990, Fairmont's Canadian hotels introduced what was known as the Green Partnership Program. It focused on operational improvements - streamlining waste management, and conserving energy and water. Since then, it has also put in place strict design and construction guidelines, and encouraged owners to seek LEED certification. Fox sees a good sustainability strategy as central to Fairmont's growth. She is also pleased that the issue has become embedded in the overall strategies of most organisations.
"Perhaps the greatest obstacle has been the lack of consistent and comparable standards for defining and measuring sustainability," she says. "Although these issues have yet to be fully resolved, many well-coordinated initiatives have pointed the way forward for companies. The long-term success of our organisation requires a balance of the environmental, social and economic. Sustainability encompasses all of these areas."
Greenhouse gas measurement
One of the schemes to which she refers is the Global Reporting Initiative, a non-profit organisation that provides a framework within which organisations can rate their own performance and judge it against that of their peers. There is also increased collaboration across the hospitality industry and beyond, with groups such as the Sustainable Travel Leadership Network bringing together members from the hotel, airline and cruise segments.
"One great example of positive collaboration is the greenhouse gas (GHG) measurement," Fox says. "A consensus was reached regarding the methodology for calculating carbon footprints for hotels - a first for the hospitality industry. Past surveys have shown that our colleagues place value on working for a company that has a sustainable focus in its daily operations, which is something that we find positions us as a leader when entering new markets."
Building a successful green operation requires leaders to demonstrate to hotel managers and those on the ground that sustainable practice is good not just for the environment, but also for the bottom line. When asked about how easy it is to promote this value at Fairmont as opposed to a giant such as IHG, Fox won't be drawn. But she does acknowledge the benefits of operating within a smaller remit.
"There are benefits and challenges unique to both scenarios," she explains. "Because Fairmont does not have the same market presence as most of the larger brands, we tend to be hotel driven as much as we are corporate driven. We have the opportunity to reach out to our individual properties, colleagues and guests to encourage them, and share feedback and best practices. These can be incorporated into guidelines and standards for all to use."
Behaviour, fuel switching and retrofits
If Fairmont's growth strategy works as expected, maintaining this level of sustainable practice across the organisation will become more difficult. The company has pledged to reduce its 2006 levels of operational CO2 emissions by 20% by 2013. How can this be achieved while adding 1,000 rooms in the process? The chain has responded with a GHG emissions strategy that focuses on three pillars: behaviour, fuel switching and retrofits. Data will be gathered and studied to help understand the issue at a micro level.
"To assist with this initiative, we conducted a comprehensive survey that analysed activities and operations at each property," she explains. "This survey provided in-depth information so we could better understand the activities and operations that produce GHG emissions at each hotel. It helped us to identify existing reduction initiatives and best practices, and develop specific reduction strategies."
Barriers to sustainability
Even with this in place, regional differences can present obstacles. Local attitudes and resources still vary, even if things have become more uniform in recent years. At each of its hotels, Fairmont has introduced green teams, which have the job of adapting hotel operations to Fairmont's broader green strategy. These teams also try to promote such ideas among the local community.
"The importance of sustainability is understood worldwide," says Fox. "But not all regions have the infrastructure in place to support programmes as simple as recycling or energy conservation. Our teams have been instrumental in helping to implement Fairmont's programmes and raise awareness throughout their communities; for example, at Fairmont Beijing, they are even working with the Chaoyang waste management department to provide other hotel brands in the district with guidance on waste management and separation."
Over the next few years, Fairmont is planning to unveil some particularly striking properties. The Grand Hotel Kyiv will open its doors in 2012, the group's first in Eastern Europe. It will be followed by the Fairmont Jaipur, its first Indian property. This goes in line with further moves into the Middle East and an architecturally ambitious project in Azerbaijan.
"The Fairmont Dubai was our first international hotel," Fox says. "It just celebrated its ten-year anniversary and we are pleased to add a new resort product within the city. Also slated for this year is an amazing project, Fairmont Baku, located in the Flame Towers on the Caspian Sea. The city is transforming itself and our hotel is among the most captivating projects."
This process of expansion is aggressive and goes well beyond Fairmont's traditional markets. Having an immediate relationship with its hotel owners allows the green message to really hit home - a connection that is at risk of weakening as the company grows.
But as an early and committed adopter of sustainable practices, the green message might be sufficiently ingrained for this to not pose a problem.