Kimpton Hotel Case Study report

Bill Kimpton created the concept of “boutique hotel” and in 1981 founded the first of the
Kimpton Hotels . The concept of “boutique hotel” is to develop a unique style hotel based on
a concept and an own personality. All the kimpton hotels are designing to reflect the energy
and personality of their locations to create a unique guest experience. In 2005, the group
counted 39 hotels over the North America and Canada.
Another innovative aspect of the Kimpton brand is the development of the “Earthcare”
program, which is a commitment to social and environmental responsibility.
They started by recycling the waste, glass bottle, and alluminium cans. Then they bought
organic products like teas and coffee and served organic wines at their evening wine hours.
One of the other plan of the Earthcare program was to sensibilise their staff to use eco-
friendly products, they also hire a water engineer to change all the water system of the hotel
in order to reduce the water consumption.

The US hotel industry in 2005 was around 4.5 million rooms and 55 000 properties and the
income generated was approximately of $15 billion per year. The hotel industry was in
constant progression since 2001 and is segmented in for different types, luxury, upscale, mid
market and economy. The Kimpton Hotels are in the upscale which is separate in two
branches, bed and breakfast and boutique hotel. The boutique hotel represented 1% of the
US hotel market but is in constant increase since the 90th.

Costs and benefits associated with the EarthCare program.

Kimpton is one the famous leaders in the environmental-friendly hotel in the North America.
In recent years, they made numbers of attempts to help the earth becoming greener and
greener. One aspect of their efforts was to establish a major environmental initiative called
EarthCare. I believe such companies like Kimpton hotels that proactively manage
environmental issues will enjoy greater benefits than those do not.

Benefits:

Cost saving: Kimpton hotels, with the greening programs and strategies had succeed
to reduce the costs. Their efforts in costs cutting can be illustrate by using 35% of recycled
paper, using energy efficient lighting (reduces the cost of energy by 75%), the linen and
towel reuse program, low-flow showerheads, digital thermostat…
Example: Kimpton Hotels’ save 250,000$ per year just by recycling 50% of waste stream.

Reputation: Companies that practice environmental excellence can attract

environmental-aware customers. People are more and more educated about the
environmental issues and are concerned of global warming and the green house effects, so
who can produce and deliver products and services with concern for sustainability would
achieve greater customer attention. In this case, Kimpton received a significant
mediatization for its EarthCare program in different newspapers.

Employees’ morale increasing. The corporate culture of Kimpton Hotel’s avoids

hierarchy and encourages the autonomy and the personal responsibility of all the
employees. The employees feel concerned of what there are doing. The employees go to
work everyday not just to be paid but feel commitment about what they do. It’s really
important for the employees to be close to the values of the people they work for. So from
the employee retention angle, this help Kimpton retain and attract people.

Financial benefits: More than a half of million dollars have been spend by different
companies that have organised some meetings and seminars in the Kimpton Hotels. These
companies have chosen these hotels because of their ecological reputation, which is in
accord with their values. Companies that are social responsible do looking for partner like
Kimpton hotels that share those values.

Costs:

Potential resistance to change by hotel staff: People don not have a habit of taking
changes. So do employees in Kimpton. Requiring all the staff to switch to new procedures or
greener cleaning products is impossible in a day or two. Furthermore, Kimpton is the
initiative in environmental sustainability, so there is no existing guideline of how to manage
these changes. Managers have to find the solutions without create issues with the
employees.
 Difficult Research and Development: Environmental investments have usualy slower
payback periods or a lower rate of return. Hence, Kimpton must do more serious R&D to
understand various aspects of their implementation: the need of the customer, the degree
of recycling products should apply, and the appropriate time to put into action? The
business Kimpton trying to do is harder to predict and calculate the profit than other
companies. The gains from investing in green services or more energy-efficiency products
could be ambiguous, while the cost of applying them is so obvious. The managers of Kimpton
should be aware of this fact.

Trade off between profit and reputation: Companies apply environmental

sustainability like Kimpton often faced big challenge at the beginning: the money use to raise
funds, replace green products, implement programs could be used elsewhere for operating
activities and other hotels expense. Therefore, Kimpton really have to think of a trade off
between the profits and the environmental concerns. If they pour too much money on
“being green”, there is not much left for other things.

Regional variations in customer values: Kimpton has 39 hotels throughout North

America and Canada, each has diversity of environmental awareness and concerns. People in
one place might prefer an organic cotton pillowcase to a “normal” one, while this is not the
matter with people in another place. Consequently, top executives must evaluate and
prepare carefully to achieve the success in different areas.

Justification of the program to investors.

EarthCare program can be a good contribution to financial performances of the Kimpton

Hotels’ because
* The program faces a global issue
* It helps to enhance competitive advantage
* Become eco-friendly is essential to keep and attract customers
* It can promote long – term interest and Kimpton’s image

Improving the environment is an emerging public issue. Various groups of stakeholders are
showing increasing interest in and taking actions to promote eco-friendly business. The
media also bring good impression about the firms who implement green processes and
criticize all the companies who are polluting. Strong campaigns to promote sustainable
practices are making by NGOs such as WBCSD, which influence the population and the public
opinion. Environmental issues also come into government’s consideration. In short,
Kimpton’s stakeholders expect that the hotels become greener. And matching this
expectation help Kimpton to avoid potentially opposing action by taken by government and
communities which usually costly to handle.

Kimpton Hotels faced the threat of “all hotels are starting to look alike and act alike” while
the core element to success of the firm is unique brand awareness and differentiated
services. To maintain this competitive advantage, Kimpton has to find new way to create
innovative features for it services. Because other firms in the US hotel industry just had little
effort in environmental care, implementing a comprehensive program like EarthCare can
once again consolidate the leading and innovative position of Kimpton in the market.

In the case, the following information was provided:

* 25% existing customers “search for unique accommodations that match their particular
needs or values”
* 65% of revenue came from business travel who “are showing increased interest in
selecting hotels using environmental criteria”
A significant portion of both Kimpton’s existing and potential customers not only require
high quality services and products but also seeking for business offers that can match their
values. And one of the most important customers’ values today is environmental friendly.
Kimpton must provide the experience of this value to keep and attract customers.

The cost-efficiency of EarthCare program may be questioned in the short term. However, in
the long term, it can reward the company with valuable assets such as increased customer
loyalty, community support, corporate opportunities, and employee retention.

The potential risks of the “EarthCare” program in the Kimpton’s business model

Fear of change
Asking someone to change their way of doing jobs is always a difficult work. Kimpton
managers face challenges of potential resistance by hotel staff to new products and
procedures. Kimpton has been known for low turnover rate, means that many employees
has been working there for long time, and they already got familiar all the stuff and jobs that
they normally do. Require them to change the tools, chemical or behaviour toward
environmental issues is not an overnight job.
Moreover, there is a portion of staff that does not understand English clearly, that make the
transfer of information about reasons to change, how to make change or how to evaluate
even more difficult.
The best solution to face these problems will be to hire employees who really care about the
ecological issues and mobilize them to lead the different steps of the program and promote
the environmental ideas. Their action could serve as a exemple to fellow staff; influence
them to do the same thing.

Fear of cost
Since a decades be greener means be more expensive. That perception seems to be true.
We take Toyota Prius as an example. Although Toyota advertises that Prius is most cost
efficient and eco-friendly vehicle, there is the fact that Prius as well as other hybrid cars are
more expensive to own than normal gas sipping cars, base on figures of maintenance, fuel
and equipment replacement. (Hybrid Vehicles Still More Expensive To Own Than Other Gas-
sipping Vehicles, Wolfgang Gruener)
The same thing happens to hotel industry. Kimpton face a difficult decision whether to
replace the current equipment with organic and eco-friendly products. Linen made of
organic cotton cost at least 50% above standard ones. It takes about 100,000 to 150,000
dollars to switch all the sheet, pillowcases and towels in each hotel. Eco-friendly paper
product cost 50% over standard product.
Moreover, the investment in green products and procedures may take long time to
recognize, while expense of purchase new environmental equipment can be added up in
short period. So, there is a risk of investing in a green hotel like Kimpton’s program.

However, due to increased consumer demand for “green” products and practices, there has
been a wide range of eco-friendly products with competitive prices and advantages.
Example: Compact Fluorescence light can be a good example. A 13watt fluorescence bulb
can give the same light as a 60watt incandescent, last 10times longer, and use 70% less
energy.
Eco friendly is a new trend of behaviour for every industry in the economies. Recognize it
soon and take proactive action is a smart decision.

Fear of lost of customer satisfaction

It is understandable when the hotel executives worry about the downgrading of customer
experience. People can ask question how the energy-saving products can bring the same or
better experience for customer. Because the benefit to customer is quite intangible, without
informing about the new eco-friendly product, customer can hardly recognize the difference.
Moreover, some organic or environmental friendly product may look cheap and not superior
to traditional materials. All of these are valid concern, since hospitality industry deals with
people feelings and experiences.
Solution: To handle the issue, Kimpton can develop a comprehensive marketing program, to
show customer the impact of environmental issues on quality of life, promote the value of
being eco-friendly and stimulate the trend of using green product. We can raise the
awareness of people about the changing environment, the global warming and other
consequences.
The increases of new trend of customer who have environmental concern and high demand
for environmental friendly service have opened a new market segment for hotel industry.
They have to operate not only for profit, but also to stand for community and environment.
And that is how people go for a green hotel.
The best example to illustrate that is in 1990, the Hotel Triton, a Kimpton hotels’ which was
located in San Francisco. The concept was to design one of the seven floors with eco-friendly
products to gain customer attention to newly installed energy efficient light, low-flow high-
pressure showerheads, programmable digital thermostats and towel and linen reuse
program. Guests did notice the change and reacted in positive manner and they started
requested room from the Eco-floor and as demand increased, the hotel expanded the
program to its all 7 floors. In 2004, the hotel was selected as “the green model hotel” by the
State of California.

Marketing value of the EarthCare program

The program didn’t only bring ecological and financial benefits but also a marketing
value. The visibility provided by the project from the marketing point of view is
undeniable. Most people who book a room in one of Kimpton Hotels do it because they
feel consistent with their values. Kimpton hotels are recognized by many as the
precursors of green hotels. This reputation of leader in sustainable development gives
them a credibility that other hotels do not have. The marketing program was enhanced
by actions such as: if a customer comes in hybrid car has a discount on the price of the
night. Competitive advantage each organization offers is different. For example, Kimpton
competitive advantage is the focus on the environment incorporated in the business
going green supporting the nature of the environment to conserve. This is a big help to
society and the environmental social issue that face the community. As a competitive
advantage, Kimpton hotel gives back 10% of each room rented daily to the Nature
conservancy. Each guest staging in the hotel, a tree is planted on his or her behalf as part
of the plant a billion trees campaign. Another competitive advantage for Kimpton hotel
is the environmental partnerships the organization has with other entities. One of the
entities is called “The Trust for Public Land.” Kimpton hotels and restaurants and The
Trust for Public Land have teamed up to help create parks in cities across America.

The success of Earthcare program

The success of Earthcare program can is mesurable in 3 points, environmental benefit,

financial benefit and the visibility that the project gave to Kimpton Hotels’.

In the Simpton Hotels, all managers and staffs were provided about the social and
environmental responsibility. Also an important part of Kimton’s history was its commitment
to social and ecological responsibility.

Moreover, Kimpton Hotels also maintain the local program in period of falling occupancy
rates and industry downturn.
The Earthcare program is like a guide of environmental conduct. According to Tom Latour,
chairman and CEO in Kimpton, the Kimpton executives believed that “Earthcare program is
the smart, as well as, the right thing to do”.

Results from Earthcare program:

Reduce waste in landfill by 15%.
Reduce energy and water usage by 15%
Increase employee retention and morale by 10%.
Manage reduction of other thing such as kilowatt-hour, gallon water, recycled paper…

Benefit from Earthcare program:

Raise $1,500 from total room revenues.
Save $250,000 per year from waste disposal.
Save 75% of energy cost with energy-efficient lightning.

One of the greatest successes of Kimpton Hotels with Earthcare program is that they
effectively associated the triple bottom line model into their business model. The fact
that Steve Pinetti gave is personnal email on the kimpton Hotels website for the people
who want to discuss and share their eco-friendly tips with him shows how much the
company is involved in its program. It says to me that the way Kimpton manage the
company as well as the business model or the marketing is completely linked with the
green program that they are doing.

References

https://www.kimptonhotels.com/
http://oikos-international.org/wp-
content/uploads/2013/10/oikos_Cases_2006_Kimpton_Hotels.pdf
“Environmental Evangelism : Kimpton walks the eco-walk”, Carlo Wolff, Lodging
Hospitality, March 1, 2005
http://fr.slideshare.net/susanlynngraham/kimpton-hotels23apr2009
http://linkingsustainability.com/2012/01/18/how-to-green-a-hotel-in-3-steps-case-study/
http://blog.thenaturalstrategy.com/tag/kimpton/
http://www.tendancehotellerie.fr/articles-breves/marketing-distribution/2079-
article/etude-de-cas-la-strategie-de-kimpton-hotels-restaurants-sur-les-medias-sociaux
http://www.elan-hospitality.fr/etude-de-cas%C2%A0-la-strategie-de-kimpton-hotels-
restaurants-sur-les-medias-sociaux/