Hospitality sector: fighting the downturn through energy efficiency
With the introduction of the government's Carbon Reduction Commitment (CRC) scheme this summer, the hospitality sector has had to work hard to become a more energy efficient industry. Leigh Stringer looks at how businesses in this struggling sector are dealing with new government legislation and how they attempt to stabilise and improve profits through staff engagement and energy efficiency.
Following the roll out of the CRC, the sector was hit with a £30m carbon tax bill which added to the declining profits of an industry already struggling to keep its head above water in difficult economic conditions.
Adding to the sector’s concerns, the mandatory Carbon Reporting scheme takes effect April next year (2013), which will require all listed companies to calculate and report their carbon emissions in their annual accounts.
Most businesses in the sector would argue that these mandatory schemes couldn’t have come at a worse time but a majority are starting to take on board the benefits of applying energy efficient measures.
This push has seen some of the biggest brands in the sector reporting significant energy savings over the past few years, particularly through reducing utility consumption and waste.
Many members of the Hospitality Sector Carbon Reduction Forum, a network group that brings pub and restaurant brands together to discuss how best to lower carbon emissions, are now hitting reduction targets through sharing experiences, engaging staff and applying energy efficient measures to properties.
Forum member and coffee chain Costa reported a 15% reduction through adopting best practices and engaging its large workforce, which has been one of the biggest challenges for the sector.
As one of the fastest growing coffee outlets in the UK, Costa has had the task of encouraging its growing workforce to become more energy efficient. With over 800 stores in the UK, increasing by around 100 each year, the need to communicate environmental issues has been essential to the success and profits of the business.
Costa’s energy and environment manager, Ollie Rosevear said: “There is a massive challenge, especially for a business with a relatively high turnover of staff, to get them excited about energy efficiency. It’s difficult to get people who [save energy] at home to do the same at work.
“We are trying to create a more robust employee engagement programme, which is now showing that our team members have a real desire to get behind the initiative. And we are looking to install a ‘green champion’ in each store, who will act as a corporate social responsibility champion, so they will be looking at the community aspect as well”.
Director of Carbon Statement, and organiser of the Hospitality Sector Carbon Reduction Forum, Mark Chapman agreed that the sector struggles with behavioural change “because you’ve got tens of thousands of people working in the sector which also has a huge staff turnover”.
“So you constantly have to embed these behavioural practices into them, which isn’t easy across that number of people.”
However, staff turnover is not the sectors only hurdle. The thousands of properties owned by companies means rolling out energy efficient measures becomes a major project with high costs.
Chapman said: “They have the same challenge on the structural side because they have hundreds or thousands of properties. So if you make any change, for example changing to LED lighting, it’s going to cost you a lot of money because you are going to have to do it across a lot of sites”.
The industry frequently opens and closes properties, which means complying with government legislation requires significant time and input from already stretched management.
“On top of this the sector has the compliance aspect with CRC and the carbon reporting scheme, which is difficult because, again, you have hundreds of properties where you’re trying to track the meter numbers when you’re also opening and closing pubs and restaurants fairly regularly”.
Under resourced head offices are also preventing businesses from addressing environmental issues.
“Another thing that is quite consistent across the sector is they are under resourced at head office. [Businesses] understandably put all their resource into frontline staff and consequently you’ve got a couple of people trying to encourage behavioural change across hundreds or thousands of people”.
For many businesses the focus is on opening new pubs and restaurants with profits often spent on refurbishment projects.
However, the sector is slowly shifting its focus towards investing in energy savings technologies and measures, according to Chapman, who added that “a mentality change of spending to save on things like utilities” will actually profit their business.
Costa recently brought forward it’s 25% 2020 carbon reduction target to 2017, after the company found that its energy efficiency initiatives had made significant savings.
Rosevear said: “Over the past year we have been developing an LED roll out for all our refurbished stores but also our new stores are being fitted with LED in the frontend. We have also lowered energy use in our air conditioning, and reduced our water use”.
Through employee engagement and a deeper awareness of energy efficiency the sector is beginning to catch up with other industries who are leading the way, such as the retail sector. The investments in energy efficient technologies are showing companies that being a sustainable, energy efficient business is profitable.
Chapman added: “Once the penny does drop [on the benefits of energy savings] they soon realise that this actually pays back much quicker than opening a new pub or restaurant and that it’s actually a more certain [investment]”.