Damai Lovina Villas: Can Eco-Standards and Certification Create Competitive Advantage for a Luxury Resort

Corey Barefield

Sustainability Case – BUSI 7136

Damai Lovina Villas has adopted a proactive environmental policy.  The company is committed to creating an environmental friendly resort and branding itself as a green hotel while at the same time maintaining its luxurious status among travelers.  The general manager, Glenn Knape, would ultimately like to leverage these sustainability efforts to increase hotel occupancy and revenue.

An audit was performed on Damai’s numerous sustainability practices to determine which sustainability categories the company was succeeding in and which categories the companies could work to improve.  The vast majority of the company’s sustainability practices fall into the reducing costs and risks category.  Damai has been very proactive in implementing strategies to reduce waste and improve operational efficiency.  Numerous energy saving efforts were implemented such as replacing bulbs with more energy efficient bulbs, installing sensors in the hotel’s water system, and lowering window shades in guest rooms.  These efforts combined to reduce electricity consumption by 65%.  A water recycling system was installed that reduced water consumption by 75%.  Farming techniques were implemented to decrease crop production costs by 90%.

While Damai’s sustainability efforts have been very effective at reducing costs, the sustainability strategy could be improved by becoming more balanced.  The company tends to focus its sustainability efforts internally.  This allows them to address present day concerns regarding current services but makes them susceptible to long-term changes in operating environments and consumer preferences.  The company’s sustainability program has been effective at achieving short-term goals and controlling costs but action needs to be taken to reposition the company so it can achieve its long term vision of using sustainability to drive revenue.

To achieve its long-term vision of using sustainability to drive revenue, Damai is considering joining a Voluntary Environmental Program (VEP) to better educate potential customers about the sustainability practices being implemented at Damai.  A VEP is a program that urges companies to voluntarily implement sustainable environmental policies above and beyond the minimum requirements established by environmental regulatory agencies.  Each VEP has an established set of guidelines a company must follow to obtain membership.  The standards and costs vary greatly among the different VEPs.  The general manager of Damai has identified five potential VEPs worth further scrutiny to determine if membership will aid Damai in repositioning itself in the market and achieving its long-term goals.  These VEPs are Best Green Hotels, Eco Lodge, Green Globe 21, Green Hotel Initiative, and ISO 14001.

Best Green Hotels is a self-reporting VEP where a company fills out a survey regarding their environmental activities and the VEP then rates the company from 1-6 green triangles with 6 being the best rating a company can achieve.  By my estimations, Damai would qualify immediately as a 5 triangle hotel.  The hotel’s existing sustainability program aligns favorably with the requirements of this VEP.  This VEP and Damai both place an emphasis on sustainability issues such as energy and water conservation, organic food, composting, fresh air, bulk amenities, and alternative energy.  Damai could improve to six green triangle status by implementing a towel and sheet re-use program and better educating staff and guests on sustainable policies.  Best Green Hotel members benefit by being included a searchable online database.  This VEP does not cost anything to join.

Eco Lodge is a self-reporting VEP where qualifying hotels can appear on the Eco Lodge website.  Potential customers can then find the hotel on the websites searchable database.  Eco Lodge encourages members to contribute to conservation, become ecological sustainable, and embrace cultural considerations.  Damai meets these requirements but in order for Damai to fully qualify for this VEP, they must implement an environmental training program.  Damai would need to improve education of guests and staff on environmental protection techniques.  Member hotels are also required to pay 10% commission on each sale made through the Eco Lodge Website.

Green Globe 21 (GG21) is a third-party certification VEP with a goal of providing companies, communities, and consumers with a path to sustainable travel and tourism.  The core principles of GG21 align with Damai in the areas of conservation, environmentally sensitive products, management of fresh water resources, protection of air quality, waste minimization, waste-water management, recycling, and establishing partnerships for sustainable development.  To qualify for GG21 and to fully embrace the core values of GG21, Damai would need to improve their noise control efforts and to better involve staff and customers in their sustainability efforts.  Organizations must undergo an independent audit in order to achieve membership.

The Green Hotel Initiative (GHI) is a self-reporting VEP designed to educate consumers on the environmental practices of hotels.  Hotels can gain membership by completing an online survey.  There is no cost to join and GHI does not aggressively promote members.  

ISO 14001 is a well-known international VEP that encourages companies to assess and manage their environmental impact.  To achieve membership into this VEP, Damai would need to develop an environmental policy, an implementation strategy, and establish goals regarding their environmental impact.  Independent external auditors must examine a company’s sustainability efforts before membership is granted.  The cost of obtaining membership in this VEP can vary from $270-$1,370 per employee.

As we can see, not all VEPs are created equal.  There are many factors to consider such as membership requirements, reputation, and perhaps most importantly cost.  If cost were not a factor, I would recommend Damai pursue membership in ISO 14001.  ISO 14001 is one of the most widely recognized VEPs worldwide.  This worldwide recognition is essential for Damai because of their international customer base.  ISO 14001 will be recognized by potential customers in all regions and lend creditability to Damai’s sustainability efforts worldwide.  The requirements for membership would also drive Damai to improve on their existing sustainability efforts.

In actuality, costs are a driving factor when considering VEP membership.  The company must evaluate the expected return from membership to determine if joining a VEP is in their best interests.  The company must take into consideration any membership costs as well as the cost of investing additional resources to meet the qualifications of each VEP.

By my estimation, Damai could qualify for Best Green Hotels without investing any additional resources in their sustainability program.  The VEP has no costs associated with it so Damai would not need to increase occupancy to justify joining the VEP.  There is no financial risk involved with joining this VEP and no reason for Damai not to join this VEP.