Hotel Industry Performance

Introduction

It is interesting to note that major hotel chains such as Ascott International, Four Seasons, Hilton, and Hyatt International all have the tendency to set up various hotels within or near a central business district (Bader 2007, pp. 179-185; Battle of the brands, 2008, p. 24-27). This presents a unique competitive setup due to the fact that each hotel chain can be stated as offering roughly the same level of services, having the same level of operational capacity, and also having the same level of international distinction (Xiao 2013, p. 133; Mastrelli 2007, p. 87). While such a setup is advantageous for consumers, it is quite the opposite for the hotel chains present since attempts at price reductions, special offers, or extra services can also be done by competitors with the same level of operational capacity and financial resources (Barsky & Nash 2006, pp. 8-24).

What must be understood is that, as a business, hotels try to achieve a certain level of profit in order to stay operational, as such in a situation where competition is high, hotel chains concentrated within a certain area must find a way to distinguish themselves from their competition in a manner that is both profitable and results in a greater degree of guest patronage (Chapter 46: Hotels & resorts: industry profile 2011, pp. 278-286; Trends & stats: by the numbers 2011, p.12).

They often do so through the use of ostentatious and luxurious offerings and services (Higley 2007, p. 64). However, various hotel chains are considered wasteful and actually contribute to operational costs (Ricca 2013, p. 3; Mills et al. 2009, p. 1-12). While this varies from hotel to hotel, wasteful costs such as excessive water and electricity use as well as continuously replacing soap, shampoo, and sheets despite no inherent need actually drives up the cost operations (PR 2012, p.1). Facility maintenance is actually one of the highest operational costs in the balance sheets of most hotels due to an apparent need to please guests, which actually facilitates and even encourages wasteful practices that drive up the cost of operations (Clausing 2007, p.8).

Not only are these practices a waste of resources, but they add to the costs of operations (Holjevac 2010, p. 85-90). It is based on this and the growing “green movement” (i.e., environmental conservatorship) that one trend in the hotel industry at present has been to enact more environmentally sustainable methods of operation (Swami & Sharma 2011, pp. 363-380; The domestic economy: Sectoral trends 2007, p. 22-24). If hotels were to change their operational practices by going green, not only would this reduce operational costs, but it also has the chance of attracting environmentally consumers who prefer utilizing products and services that do not impact the environment negatively (Davidson et al. 2011, pp. 498-516).

What is “going green”?

The concept of going green is based on the process of altering approaches towards the consumption and utilization of resources so as to ensure a more environmentally friendly method of using and consuming resources (Cain 2008, p. 95).

The basis behind this is the assumption that since the Earth is a closed-off ecosystem with a finite amount of resources if nothing is done to conserve and ensure these resources stay replenishable in the long run, there may come a time when the Earth will no longer be able to support human civilization (Southerland 2001, p. 74). Such an assumption is not without merit; as the human population continues to expand, so too makes the demand for resources increase. Unfortunately, resources that command the highest demand (wood, freshwater, and food) are only replenishable to a certain extent, while others have a set amount (oil, gas, and certain chemicals) and cannot be replenished at all.

Consumer Behavior

The theory of consumer behavior revolves around the concept of the perceived value or satisfaction that a consumer derives from the consumption/ use of a particular commodity. In terms of actually understanding the demand side of market consumption/utilization, the theory of consumer behavior uses two distinct methods of measurement, namely Total Utility (TU) and Marginal Utility (MU). Total utility is defined by various experts in the field of consumer behavior as being the equivalent to the total level of satisfaction that a consumer can get from the use/consumption of a particular good or service. In the field of analyzing consumer behavior, marginal utility is basically described as an add-on. Namely, it is the additional form of satisfaction that a consumer /hotel guest can get from the use/consumption of an added portion of a particular good or service.

The point of view of the consumer, namely consumer preference, plays an important role in determining whether the total utility of the consumer knowing that the hotel they are staying in practices environmentally beneficial practices actually contributes to consumer patronage of that particular hotel chain (Detlefsen & Glodz 2013, pp. 1-17; Wastnage 2007, p. 4-5). It must be noted that while the concept of consumer preference plays an important role in the choice of a particular product or service, the fact remains that the remaining concepts of rational behavior, budget constraint, and price also play roles that can actually override the concept of preference (BARNES Report Hotels & Motels Industry 2012, p. 1-257; Mellen 2011, p. 119-129). While a consumer may prefer to stay in a hotel that has gone green, barriers to this choice in the form of higher prices, which directly conflicts with a consumer’s inherent budget constraints, would thus change their pattern of behavior to choose a more affordable solution in order to conform to what is rational (Miller & Washington 2008, pp.150-154). On the other hand, if an environmentally-conscious consumer is presented with two choices, namely a hotel that has gone green while the other has not, with both prices being similar, it is likely that the consumer will choose the former choice rather than the latter (Environmental and sustainability reporting 2005, pp. 14-21). This decision is influenced by all concepts of consumer behavior wherein preference and rational behavior for environmentally beneficial practices led the consumer to choose the hotel that had gone green while the similar prices for each hotel conformed to the consumer’s budget constraint, thus letting the choice be left up to preference (Anuwichanont et al. 2011, pp. 91-100).

Conclusion

With the growing proliferation of environmental awareness among air travelers and the fact that a large percentage are within the demographic of individuals who are more inclined toward environmental awareness, this sets a precedent for changing hotel operations towards a more environmentally conscious manner so as to attract this growing demographic of visitors (Heung 2013, p. 50; Survey reveals top 10 trends in hotel industry 2004, p. 7).

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