Caso Kipton

CASE SUMMARY

Kimpton’s founder, Bill Kimpton, is credited with inventing the “boutique” hotel segment in 1981. By 2005, Kimpton Hotels was comprised of 39 hotels throughout North America and Canada, each one designed to create a unique and exceptional guest experience.

While Kimpton was known for designing hotels that reflected the energy and personality of their distinct locations, by 2004 the company’s top executives realized that uniting its hotel portfolio under a single recognizable brand could add considerable value. One aspect of the branding effort was to add the Kimpton name to each property, as in “Hotel Monaco San Francisco, a Kimpton Hotel.” Another aspect of their efforts to establish the Kimpton brand was the development and roll out to all of their hotels of a major environmental initiative they named EarthCare. EarthCare was built on an already established commitment to environmental and social responsibility. Their Hotel Triton was a model for the program, as it already included initiatives such as: energy efficient lighting solutions, low-flow/high pressure showerheads and sink aerators, and toilets that reduce water use, linen and towel reuse program, non-toxic, non-allergenic, all natural cleaning products, low VOC paints used to paint walls and ceilings and more. Planned future initiatives went well beyond those in the Triton Hotel.

There were two basic ground rules for the rollout: New initiatives couldn’t cost more than what was already budgeted for operations and capital improvements, and they couldn’t adversely affect customer perceptions or satisfaction.

The case allows students to explore whether there is a ‘business case’ for the Earth Care Program as well as posing a number of implementation issues, including:

• Potential resistance by General managers to centralized imperatives

• Potential resistance by hotel staff to new products and procedures

• Investments might have slower payback period, lower rate of return, intangible benefits

• For some products, required investments might exceed existing budgets

This case was developed to be cross-disciplinary and can be included in courses in:

- environmental management

- business & society

- strategic management

Silverman / Thomas Kimpton Hotels – Balancing Strategy and Environmental Sustainability 1

oikos Sustainability Case Writing Competition 2006 3rd Prize

Kimpton Hotels: Balancing Strategy and Environmental Sustainability

Michael Pace faced a dilemma. He was Kimpton Hotels’ West Coast Director of Operations and Environmental Programs, General Manager of its Villa Florence Hotel in San Francisco, and the main catalyst for implementing its “EarthCare” program nationally. He was determined to help the boutique hotel chain “walk the talk” regarding its commitment to environmental responsibility, but he also had agreed not to introduce any new products or processes that would be more expensive than those they replaced. Now that the first phase of the program had been implemented nationwide, he and the company’s team of “eco-champions” were facing some difficult challenges with the rollout of the second, more ambitious, phase.

For example, the team had to decide whether to recommend the purchase of linens (towels, sheets, pillow cases, etc.) made of organic cotton, which vendors insisted would cost at least 50% more than standard linens. It would cost an average of $100-150k to switch out all the linens in each hotel. If they couldn’t negotiate the price down, was there some way they could introduce organic cotton in a limited but meaningful way? All linens are commingled in the laundry, so they can’t be introduced one floor at a time. Maybe they could start with pillowcases – though the sheets wouldn’t be organic, guests would be resting their heads on organic cotton. Would it even be worth spending so much on linens? From a PR perspective, would it make that much of a difference? Should they wait and see, phase it in over time, or drop the idea altogether? They would face similar issues when deciding whether to recommend environmentally friendly carpeting or furniture.

And then there was recycling. The program had been field tested at Kimpton hotels in San Francisco, a singular city in one of the most environmentally progressive states in the U.S. Now the eco-champions team had to figure out how to make it work in cities like Chicago, which didn’t even have a municipal recycling program in place. In Denver, recycling actually cost more than waste disposal to a landfill, due to the low cost of land in eastern Colorado. Pace knew that the environmental initiatives most likely to succeed would be those that could be seamlessly implemented by the General Managers and employees of the 39 unique Kimpton hotels around the country. The last thing he wanted to do was to make their jobs more difficult by imposing cookie-cutter standards.

Kimpton had recently embarked on a national campaign to build brand awareness by associating its name with each unique property. Pace knew that the success of Kimpton’s strategy would rest heavily on its ability to maintain the care, integrity, and uniqueness that customers had come to associate with its chain of boutique hotels. Other hotel companies had begun investing heavily in the niche that Kimpton had pioneered. To differentiate itself, the company had to continue to find innovative ways to offer services that addressed the needs and values of its customers, and EarthCare was a crucial part of its plans. But could Pace find a way to make it happen within Kimpton’s budget, and

Silverman / Thomas Kimpton Hotels – Balancing Strategy and Environmental Sustainability 2

oikos Sustainability Case Writing Competition 2006 3rd Prize

without adversely affecting the customer experience? Would Kimpton be able to keep the promises made by its new corporate brand?

The U.S. Hotel Industry

By the summer of 2005, the absence of any major terror attacks since September 11, 2001 had encouraged Americans to begin traveling again. Buoyed by a rebound in business travel and continued growth in leisure related spending, the lodging industry had shown steady growth since mid –2003. In 2004, the industry posted impressive gains in room occupancy levels, REVPAR (revenue per available

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