The need to attract investments to the hospitality industry, as there is no advancement or sustainable development of Croatian tourism without them, was one of the topics discussed at the recent 1st Adria Hotel Forum. Discussions went on for two days on issues ranging from the place of Croatian tourism in the global tourism industry, over destination management, the need for cooperation between public and private sectors to sources of financing, and green buildings were also on the agenda.
Hotels represent an important economic asset in Croatia, as shown by the data that they account for more than 25% of all overnight tourist stays in the country, and that in 2012 tourism contributed more than 10.5 billion kuna in revenues to the government budget. Implementation of green concepts in hotel construction and operations is an integral part of the Development Strategy of Croatian tourism until the year 2020, recently adopted by the Government of the Republic of Croatia. One of the goals is to make Croatia one of the most competitive tourist destinations in the world by that year. Is it an inspiring goal or mission impossible? It is true that the funds channelled into new investments in 2013 are almost two times higher than in 2012, and it is well known that this is the only way to ensure competitiveness, in addition to the badly needed improvement in legal framework, business climate and market psychology.
The topic of the forum that we found most interesting was green hotel industry, a part of the green movement. This has become an important topic in many countries over the last couple of years, probably mostly thanks to the ever more rigorous legal framework and increased awareness of the relevance of environment protection. The hospitality industry has started recognizing the fact that a green approach can not only cut costs, improve operations and increase profit but also meet the demands of an increasing number of tourists for ecologically sustainable hotels and all the services they offer. In foreign markets, there are an increasing number of international companies seeing sustainability as a prerequisite for their cooperation with a hotel and this has become their key criterion when they select where their members will stay.
The first presentation on the topic was about one of the most sustainable hotels in the world, the Crown Plaza Copenhagen Towers, which was awarded the prestigious title “The world’s greenest hotel” in 2010. Built on the outskirts of Copenhagen, the hotel has demonstrated that it is possible to incorporate the green approach in construction but also in management of an international hotel and avoid negative impact on the environment. The greenest hotel in the world really deserves the award it received for its energy efficiency, because its yearly energy consumption is only 190 kwh/m2, with 100% of energy generated from sustainable sources. It is the first example in Denmark of the air cooling system using ground water with a reduction of the cost of heating and cooling to the tune of 90%. It has the largest solar panel systems installed in Northern Europe, with the yearly volume of electrical energy generated exceeding 200,000 kwh, roughly equal to the needs of 60 Danish households. Think green is not only left to architecture and what has already been built, but is at the core of the hotel operations and maintenance. Organic food served at the hotel restaurant is locally produced and prepared in a technologically innovative kitchen in order to minimize losses of heat, and all the waste generated is used for gas production, 40% of the hotel furniture is made from recycled materials, and the level of attention to detail can be seen in the hotel bathrooms where shampoo and soap are made from biodegradable corn and potato starch. All electronic equipment selected can be recycled and meets the energy specifications. Investment in innovative technology means huge energy savings due to a system of electronic regulation of the air conditioning system in all the rooms and a smart system of light management in corridors which reacts to sound and movement. Rational energy management is not the only priority as water savings are also among the requirements that green construction is to meet. All in all, this is an all-encompassing green way of thinking, with the entire community involved.
The relevance of a favourable investment climate is demonstrated by the fact that among all the world cities, Copenhagen was recognized already two years ago as a model of the sustainable city of the future. The city has set itself the goal of becoming the first C02 neutral city in the world by 2025 and Copenhagen may well do it, because of its focus on sustainability, the green ideas of its architects, city officials and of the entire community. At the round table organized at the forum, the question about the situation in Croatia and the option of green hospitality industry development in the country was discussed by panellists Allan L. Agerholm, director of the world greenest hotel, Michael LaBelle, lecturer at CEU Business School in Budapest, Saša Randić, architect, Vedrana Likan, president of the Green Building Council of Croatia, Hrvoje Kvasnička, vice-president of the Green Building Council of Croatia and consultant at Jones Lang LaSalle and the moderator Anđelka Toto-Ormuž, head of corporate affairs at Rockwool Adriatic.
In our context, green construction is often understood to mean energy efficiency and this is widely accepted by the general public, but energy efficiency is just one demand to be met by green construction, which is a much wider term, and includes renewable energy sources, sustainable and recycled materials, quality of environment, health and wellbeing of people, ecologically acceptable waste management, transport and many other parameters, among which energy efficiency is just one, although for sure a very important factor, as of all the harmful impacts on the environment caused by construction, energy inefficiency has potentially the greatest impact of all.
There are over 650 hotels in Croatia today, of which only 10% were built in the last five years. According to the Croatian chamber of commerce, Croatian hotels were built on average 40 years ago, so there is a lot of need for reconstruction which could follow the principles of green construction. There is no doubt that the existing building portfolio represents the best opportunity to embrace the green approach right now. Although it is not yet something the society is aware of, energy renewal is not a matter of choice any more, but should be done by law. There is no alternative, green has become a new standard and the only question is to what extent a project will be green, and whether it will only meet the necessary legal requirements or go a step further and increase in that way not only the value of the investment made, but also its market attractiveness, irrespective of the category of products.
Croatia has for years been part of the European and the global market and this has made us a member of the community that sees investments in tourism and commerce as long-term profitable endeavours. Sustainable construction presupposes economically sustainable investment, but the problem is that there is no incentive to invest in renewable energy sources. Such investments initially exceed the level of investment needed for “conventional” construction, but are fully justified by constant increases in energy prices, changing consumer preferences and increasing user knowledge.
Green thinking may seem out of place in Croatia, given the continued fall in activities in the construction industry over the last 44 months. On the other hand, there is the European directive known as “20-20-20 by 2020″ which requires reducing greenhouse gases’ emissions by 20%, reducing overall energy consumption by 20 % and increasing the share of renewable energy sources in overall consumption by 20% until 2020. Although there is no doubt that it is necessary to meet these requirements, known as 3 x 20%, by 2020, it is hard to expect that implementation will take place on a larger scale, unless there is a legal framework defined by the government that would really encompass all options, as current regulations are inadequate. In addition to developing regulations, which has been an issue left unresolved for some time unfortunately, planning sustainable hospitality industry means finding locations that are close to renewable energy sources, such as water, as well as dealing with restrictions and conditions related to the hotels’ seasonal pattern of activities.
A new cycle of Croatian market development has already started, there is no doubt about that, although it is not nearly as intensive as it was in the best years for construction industry, but there is movement ahead nevertheless, and this is very important for the economic recovery to start, as construction industry and tourism are the key national GDP drivers. The number of the new breed of investors is admittedly small, as are the green steps taken ahead of the times, but it is actually necessary to get the market and the industry ready. It is also necessary to understand that an extraordinary potential lies in the hotels that have been out of use for some time and are government owned, so it is logical to assume that in the future funds will be channelled to the area of private-public partnership in order to renovate our tourist facilities. It should be noted here that there is no simple calculation to arrive at an approximate but relatively accurate estimate of a hotel business performance after its energy system has been restructured, at least not in terms of the exact correlation between the cost of a new energy facility and expected increase in profitability. What is key is that the hotel renovation is carried out in accordance with the agreed strategy and in cooperation with a number of experts in green construction and in hotel management.
It is now well known that long-term advantages of renewable energy sources include return on investment, i.e. expected savings and profit, which is certainly of interest to all those who are considering their implementation in the situation when there are no adequate incentives provided by the government, and it is therefore only by recognizing all the actual advantages of the green approach that they could be induced to implement it. The advantage of hospitality industry is that it is easy to introduce renewable energy sources, at least compared to residential and office buildings, where the idea of investing in sustainability has not yet been accepted and it is perceived exclusively as the cause of lower earnings. The same is true when these premises are rented, as the rent is the key factor while future costs of maintenance are not taken into account. This is where market psychology comes into play, and the market is not yet ready for this type of investment. On the other hand, other round table discussions have indicated that younger generations are getting more involved in hospitality industry and they are the ones demanding the green approach.
In conclusion, it is important to stress that there are ways to think green, that include acting now and saving money tomorrow and that do not necessarily require huge financial investment that are not feasible at present. The process of adopting a green approach is not necessarily a complex one and need not happen at once if the required conditions and incentives are not in place, but even small initial steps can mean a lot for raising awareness. Green construction is certainly a way towards increasing our competitiveness in the market that is fiercely competitive. If we wait, we will be seen as lacking competitiveness required to be a global player, so we need to act now, before it is too late. Investments can currently be attracted only to green projects, and even in Croatia there are changes signalling that things can be improved. The key is to strive for simplicity and for solutions that can be implemented in a straightforward manner.