WILLINGNESS TO PAY MORE FOR GREEN HOTELS

By Dimitriy Sinkov

RESEARCH PROJECT SUBMITTED IN FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE OF BSc (Hons) IN INTERNATIONAL HOSPITALITY MANAGEMENT (First copy) in the School of Hospitality, Tourism and Leisure Management

SUNWAY UNIVERSITY MALAYSIA July 2011

CONTENTS
List of Figures.........................................................................................................................i List of Tables..........................................................................................................................ii Acknowledgements................................................................................................................iii Abstract..................................................................................................................................1 Chapter I Introduction.........................................................................................................2 1.0 Introductory Phase................................................................................................2 1.1 Research Problem.................................................................................................4 1.2 Research Purpose.................................................................................................7 1.3 Significance of Study...........................................................................................7 1.4 Research Questions..............................................................................................8 Chapter II Background and Literature Review...................................................................9 Chapter III Methodology....................................................................................................18 3.0 Study Area...........................................................................................................18 3.1 Procedure and Time Frame..................................................................................19 3.2 Scope and Limitations..........................................................................................21 Chapter IV Results..............................................................................................................23 Chapter V Conclusion and Recommendations...................................................................54 5.0 Introduction of Chapter V....................................................................................54 5.1 Perception of green standard charges for hotels................................................54 5.2 Key attributes to the green hotel practices.........................................................65 5.3 Conclusion............................................................................................................69 5.4 Recommendations................................................................................................72 References..............................................................................................................................73 Appendix A Survey Sample Page 1....................................................................................79 Appendix A Survey Sample Page 2....................................................................................80

LIST OF FIGURES

Fig. 2.0....................................................................................................................................25 Fig. 2.1....................................................................................................................................26 Fig. 2.2....................................................................................................................................27 Fig. 2.3....................................................................................................................................28 Fig. 2.4....................................................................................................................................30 Fig. 2.5....................................................................................................................................30 Fig. 2.6....................................................................................................................................31 Fig. 2.7....................................................................................................................................32 Fig. 2.8....................................................................................................................................33 Fig. 2.9....................................................................................................................................35 Fig. 2.10..................................................................................................................................36 Fig. 2.11..................................................................................................................................37 Fig. 2.12..................................................................................................................................39 Fig. 2.13..................................................................................................................................40 Fig. 2.14..................................................................................................................................41 Fig. 3.0....................................................................................................................................42 Fig. 3.1....................................................................................................................................43 Fig. 3.2....................................................................................................................................44 Fig. 3.3....................................................................................................................................45

LIST OF TABLES

Table 1.0.................................................................................................................................24 Table 2.0.................................................................................................................................29 Table 2.1.................................................................................................................................32 Table 2.2.................................................................................................................................34 Table 2.3.................................................................................................................................34 Table 2.4.................................................................................................................................38 Table 2.5.................................................................................................................................40 Table 3.0.................................................................................................................................46 Table 3.1.................................................................................................................................47 Table 3.2.................................................................................................................................48 Table 3.3.................................................................................................................................49 Table 3.4.................................................................................................................................50 Table 3.5.................................................................................................................................51 Table 3.6.................................................................................................................................52 Table 3.7.................................................................................................................................53

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Acknowledgements
Many people have made this research possible and I owe them all a debt of gratefulness. An enormous amount of work went into this research, I and without further ado, I would like to thank the following persons: My supervisor, Ms Rita Lo, for her belief, encouraging support, patience and confident outlook at all times during this task. Her academic guidance and help - I feel enormously honoured and extremely lucky to be her student. Datuk Peter Brokenshire, General Manager of Kuala Lumpur Convention Centre, for his time to share with me opinion and outlook on the hospitality industry in terms of green practices. Mohd Norzainiazzwa Mohmad, Executive Membership Development from Malaysian Association of Hotels, for assistance with identification of green certified hotels in Klang Valley. Special thanks to Jenny Ng-Blandford and Shamani Devi, from Creative Event Solutions (EVENTION) for their advise, recommendations, and hospitality. All the Staff, of Sunway University, School of Hospitality, Tourism & Leisure Management. All my friends at Sunway University, swimming buddies, and high school classmates, for help, support, encouragement and belief. Particular thanks go to Gabriel Tan, Dilky Amarakoon, Tien Jinq Liew, KarMern Choong, Deniz Lam, Carmen Izzalia, Paula Ribka, Barbara Ann Mathews, Valerie Anthony, Vaageesan Ganeesan and others All the respondents who have contributed to this research by filling up the questionnaire. Finally, and most importantly, I am massively obliged to my family, especially Nataliya Sinkova, Alexey Sinkov, grandma Svetlana Azimova, and my cats, for all their love, support, patience, inspiration, motivation, time and financial support, as to allow me to write this thesis in time for submission date.

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Abstract This research project is carried out to study respondents interest towards green hotels, through paying more for green hotels. An amount that respondents are willing to pay more for green hotels is to be found through primary data collection (distribution of questionnaires) to the citizens, residents and tourists within Klang Valley Region of Peninsular Malaysia. Research aims to contain about 300 valid responses to be analysed and evaluated. The research is expected to return positive result, with majority of the respondents willing to pay more for green hotels, to encourage hotels that do not yet have green practices in place to change the way they run their operations, by turning to environmental practices approach.

Chapter I Introduction 1.0 Introductory Phase Ever since the early sixteen hundreds, the first taverns and inns begun to appear and serve important, indeed pivotal role of temporary accommodation for travellers. With years, the industry has grown significantly in terms of service trends, luxuries, magnitude and importance. Much later, only in the late ninetys had the various concerns relating to excessive carbon emissions which pollute the environment and the living species were observed by the scientists. This has resulted in the development of green projects and associations for environmental protection. With recent years, there are more organisations, companies and businesses who decide to become eco-friendly (green) in order to market themselves better and boost their reputation. According to USGBCs reports, it is estimated by the year 2010, there will be about 100,000 LEED-certified commercial buildings and over 1 million LEED-certified household units built. It is 100 times more in comparison to the year 2007. A LEED stands for Leadership in Energy and Environmental Design. It is a Green Building System, that encourages and accelerates global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted tools and performance criteria, as defined by U.S. Green Building Council. According to study done by J.D. Power and Associates 2007 North American Hotel Guest Satisfaction shows that almost three quarters of all the hotel guests surveyed, are willing to participate in their hotel's environmentally friendly programs. This suggests that customers are well aware of the current environmental concerns. Such information can come from various media sources ranging from black and white written newspapers to more

technologically advanced internet advertising and the television (Butler, 2008). Another source states that 16 percent of hotels guests stay with the hotel because of their eco-minded practices (survey done by Kimpton Hotels and Restaurants). These include the use of nontoxic cleaning agents and in-room recycling bins (Olson, 2007) Retrofitting or building from scratch a LEED-certified project requires additional funds. Despite cost saving factors, a hotel must charge their guests more for the services and accommodation, due to higher start-up or upgrade costs. Hotels should learn ways to promote and deliberately encourage their guests, that by paying a higher price for the room or services, in return promises them a safer environment to live in. The research question would be such, as to find respondents willingness to pay more for green hotels. By looking into the economic theories, when there is a demand there is a supply. Similarly, awareness of global warming has created interest and desire of guests to participate in environmental programs. Meaning that the demand exists, and if it exists, guests should be willing to sacrifice slightly more for green. For example, Millers (2003) research showed that consumers are already making decisions, based on environmental, social and economic quality for day-to-day products and are keen to transfer these habits to the purchase of tourism products (Miller, 2003:17). Millers research shows that 78% of respondents did either always or sometimes look for environmental information about their intended holiday destination (Miller, 2003: 291). Similarly, an Italian Environmental Protection Agency reported that interest in eco-labels has increased and that 73% of interviewees preferred eco-labelled hotels (Sloan et al, 2009). In more detail this and other matters will be discussed later in the text.

1.1 Research Problem There are a few problems to the reason behind doing this research. One of them is the scarcity/shrinkage of natural resources in the past decade that has been primarily caused by deforestation for various construction projects of leisure and business intentions as well as increased travel (transportation). The hospitality industry is among the most energy-intensive sectors of the tourism industry, and the prevalence of fossil-fuel-generated power and the (still) marginal use of renewable energy resources translate into emissions of carbon dioxide, particulates, nitrogen and sulphur oxides, and other air pollutants. It is estimated that a typical hotel annually releases between 160kg - 200kg of 2 per m2 of room floor area, depending on the fuel used to generate electricity, heating, or cooling (Bohdanowitcz, 2005). European hotels consume 39TWh (terawatt hours) of energy annually, half of which is in the form of electricity (Bohdanowitcz, 2005).European hotels are responsible for 13.6 megatons of 2 (Verlag, 2003) being released annually. In Asian countries, energy consumption could even be higher than the figures in European hotels, as many of the Asian countries are 2 nd world countries (developing), and would generally tend to consume more fossils. South East Asia in particular, is a region where humidity and weather temperature are generally high. An extensive use of air conditioning is practiced at every home, businesses and industries. In European countries, heating can be electric as well as gas and water piped, air conditioning on the other hand is solely energy-intensive, and uses CFC (chloro-floro carbons) which are toxic and destroy ozone layer. This results in a lot greater damage to the environment. Water consumption (in terms of overall amounts and use patterns) depends not only on the type, standard, and size of facility, but also on services and facilities offered, climate and irrigation needs, and any water conservation practices. It is estimated that, depending on the hotel standards, guests generally consume between 170 and 130 litres of water per night

(Verginis and Wood, 2001). By comparison, a recent report from European hotel chain provided a figure of 440 litres per guest-night (Radisson SAS, 2002), while another source reports a consumption of 224 litres per guest night (Scandic Hotels AB, 2000). In South East Asian region, in particular Malaysia, water consumption per guest-night could even be higher, due to the high humidity and exotic nature of the country that requires guests to consume water for various personal needs a lot more often. Also, as the public is a lot less educated about water management practices and subsidies from the government in Malaysia, as compared to the European countries. Because hotels are large users of consumer goods, waste generation is probably the most visible effect that the hotel industry has on the environment. According to one estimate, a typical hotel produces in excess of 1kg of waste per guest per day, which results in tons of waste each month. A large proportion (50% to 60%) of materials that constitute this waste, could in fact be recycled or reused (Smith et al, 1993; Smith-Jessup, 1998; IHEA, 2002). The average quantity of unsorted waste materials for Radisson SAS hotels was reported as 3.1kg per-guest night in 2002, for an instance, Scandinavian and German facilities producing considerably less waste (1.5kg per guest-night) than the corporate average (Radisson SAS, 2002). Best practices in waste minimisation and recycling have shown that waste generation can be limited to 50g of unsorted waste per guest-night (Sanga Saby Course & Conference, 2002). This in turn has created enormous volumes of waste materials and polluted the surrounding environment (Rubio et al, 2007). Due to land scarcity, land, costs more to be purchased, and thus building green hotel will further require stronger financial support. Another reason is greening of hotel is in its infant stages, and due to this, only a small percentage of hotels in the world that can be classified as Truly Environment Friendly,

meaning they are up to the top standards of the green certification systems by various associations for environmental concerns. An example can be LEED-Gold or LEED- Platinum certified establishment. EarthCheck - Gold and Platinum certification. Another, the most influential factor for why green management is at its infant stages in the hospitality industry, is because of high premium costs of 10-15% involved in building or retrofitting (Butler, 2008). However, these figures are before the year 2000. From the 21 st century onwards, these premium costs have dropped significantly (USGBC, 2009), although, not many current operating hotels can afford to terminate business to retrofit the establishment, for they will be losing customers and revenue, if they were to do so.

1.2 Research Purpose The idea behind this research is to investigate the possibility of guests, travellers and other persons who use the facilities and services provided by the hospitality industry, in particular hotel accommodation and services, to a willingness to pay more for green hotel. The willingness to pay (WTP) more in this context is referred to guests staying at the hotels that practice green management in order to conserve the environment and help to save the natural resources, since these resources are being misused (Bohdanowicz, 2005).

1.3 Significance of Study The objective of the research is to find a diplomatic solution for both hoteliers and environmentalists. From scientific point of view, going green will be effective in the long run to the ecosystem as a whole. From economic point of view, resources necessary to reach the targeted figures set by the organisations and associations, as threshold values, may be proven to be unprofitable in short term. Some of these organisations and associations are: USGBC, IHEM, ISO, Green Globe 21, Green Seal, Greenblue, Green Label, Eco Logo, Design for Environment, LEED-EB, Greenstar Certified, Green Guard and many more. In the long run this may be more practical, although the shareholders and the stakeholders of such businesses may not want to invest any funds into this relatively new strategy. The idea behind performing such a research is to discover customers attitudes towards green hotels. The only reason to encourage many or preferably all hotels to practice even slight green management is by customers demand and willingness to help the businesses to achieve these goals. Such a method is: if customers agree to pay more for the hotels and also the services provided by the green hotels, this could encourage or be used as a motive to

other competing hotels to step up and get certified. In a way, this is a win-win situation. Customers are willing to pay more for better and healthier environment, and on the other hand by paying more, hotels can use these extra earnings for enhancing their green practices and also giving back to the public in a form of public relations (eg. donations, complimentary, discounts, sponsorships).

1.4 Research Questions The research questions are based on the above mentioned. The most influential and imperative question of the research will be: Are the customers willing to pay more to stay at a hotel that practices green management or in fact is green certified? Following this question, will be: If customers are willing to pay more to stay at a hotel that practices green management or is green certified, how much more are they willing to pay for it, and if they are not willing to pay more what is/are the reason(s) behind it? This is to actually find the motives and key factors that can be stimulated and learned by the hoteliers to know their customers better. Last but not least, will be the question asking: How would the customers prefer hotels to utilise the financial support that they extend their hand to, be used by the hotels, and will paying more act as a springboard to encourage more hotels to get certified?

Chapter II Background and Literature Review In this literature review, some of the current trends in hotel industry towards green management, hotels interest and contribution to support the idea of eco-friendly-profitfriendly (Eco-Friendly and Budget-Friendly, 2009), what benefits does green management holds and of course customers desire to pay more for green. First and for most, it is necessary to mention, that many authors who have written on a matter of green and eco-friendly businesses, in particular the hotel industry, are all being very optimistic and very supportive with a Green Businesses idea (Butler, 2008; Saunders, 2009). Thomas Friedman, in the April of 2007, has said his famous phrase green is the new red, white, blue and all the other colours.

What are green hotels? According to Top Canadian Hotels, green hotels are defined as environmentally friendly properties that take the initiative and implement very important practices and programs to reduce energy, water, and waste. Not all green hotels have the same practices as it depends on the decisions made by management and hotels regulations and level of their commitment and potential. Effective green hotels will try their best to attain as many methods as possible. These can include the various recycling programs (eg. paper, plastic, and glass), linen changing programs (linen are being changed less than once a day, unless requested by the guests), energy saving lighting throughout the hotel with motion sensors in parts of the hotel, when not in use. Water taps in the guests rooms to have motion sensors built in so that water only pours in the case when a guest reaches for a tap, similarly guest room key cards are used to activate the electricity in the room. Some green hotels try to send a message out to their guests on how to be eco-friendly and how the hotel is doing its part in protecting the planet. As said by Heisterkamp, backing up green claims is critically

important, metrics and verification ensure credibility. Third-party verification of claims can help in this. Starting off on the good note, having hotel that is LEED-certified will result in enormous cost savings in the operation and running of the hotel (Butler, 2008). Many chain-affiliated hotels integrate environmental issues in their company policies, which usually are imposed on individual establishments (Bohdanowicz, 2005). It is important for large companies to vivaciously display environmental and social commitment and achievements on top of a good financial statement. On the contrary independent hotels are least interested with environmental concerns and interest to act, since it potently depends on managers outlook and acquaintance (Bohdanowicz, 2005). Different countries have their own polices and regulation for green certification standards apart from those licensed associations for environmental protection, that has been mentioned earlier in the text. Ecomark schemes in various countries have more or less the same criteria. Taken from the Ecomark Scheme of India, following are the criteria
Product General Requirements 5.3 Criteria of the Product Categories covered under the scheme. 1 Soaps & Detergents 2 Paper 3 Food Items 4 Lubricating Oils 5 Packaging Materials 6 Architectural Paints and Power Coatings 7 8 9 10 11 12 13 14 15 16 Batteries Electrical/Electronic Goods Food Additives Wood Substitutes Cosmetics Aerosol Propellants Plastic Products Textiles Fire-extinguisher Leather

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The most prominent benefits of green as mentioned above are the operational costs. To briefly sum them up, they would look like this: 30 to 50 percent savings in energy use, up to 35 percent in carbon emissions, 40 percent in water, and 70 percent for solid waste (Butler, 2008; Yudelson, 2009). These results are achieved with the introduction of new and improved technologies, materials and techniques. The best environmental policy does not help much if employees do not understand the philosophy and goals behind it and do not know how to attain these goals. Employees, expected to achieve and implement certain initiatives, need to have proper skills, knowledge, motivation and awareness thereof (Green Hotelier, 2007b). Hence, environmental training should be conducted on a regular basis, at the same time be enjoyable, while involving and motivating staff in order to achieve best results. Some of the current trends why hotels go green are because green hotels produce very hospice working environment (Wallace, 1987). 1% increase show tremendous impact (Butler, 2008). Plus, there are advantages in attracting and retaining employees who want to work in a green building (Butler, 2008). A better use of daylight, can allow in more of natural sunlight to reduce eye strain, better use of shade by planting more trees in open air areas. Superior heating and ventilation systems to allow more fresh air into the premise to prevent staff from asphyxiating or fainting; minimizing the use of toxic materials such as cleaning agents and powerful detergents, instead using some alternate materials. Use of low-emission adhesives, sealants, paints, carpets, keeps the environment on the inside cleaner and more pleasant for employees to work in (Environmentally Friendly Hotels, 2010) The report noted that there have been thousands of studies finding significantly reduced illness symptoms, reduced absenteeism, and increases in perceived productivity, as compared to workers in buildings without green features (Butler, 2008).

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Some of the smartest business people are now going green. They are Marty Collins, CEO of Gatehouse, goes green with $800 million hotel mixed-use project in Hollywood, California. Barry Sternlicht with "1" hotels does the same (Butler, 2008). It is partially due to significantly lower cost premium in building green. Years earlier when all these concepts were relatively new, cost premiums were in range of 10-15%. At present times, these numbers have reduced drastically to a mare 1-2% on LEED-certified projects. In some cases they were equivalent to a zero (USGBC, 2009). Partially, the reason to change is to be socially responsible. Taken from USGBCs official website, a LEED certification provides independent, thirdparty verification that a building project meets the highest green building and performance measures. There are obviously signs of increasing number of green businesses (USGBC, 2009), however, they must be equally efficient in terms of comfort and service offered to the public and their customers. Hoteliers might think of green as an upgrade and therefore requires higher prices being charged, while the clientele might think of it otherwise. Even though, that green advertising numbers have increased in recent years, both in printed media and television, (Banerjee, and Gulas 1993), not much is known about the comparative persuasiveness of different appeals for dissimilar target audiences (Lefkoff-Hagius, 1995). Customers differ in their knowledge of and concern about the environment. Customers can be classified according to their level of commitment for an environment based on various attitudes and behaviours (Roper Organization, 1992). A few researches have been done to show correspondence in dispersion through environmental concern (Durand and Ferguson 1982; Samdahl and Robertson 1989; Webster, 1975; Wysor, 1983). In the overall, the findings have shown that the frequency of customer participation in environmental sector is

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directly proportional to their interest in the purchase of green products (Lefkoff-Hagius, 1995). According to Borchers et al. (2007, p.3327), an existing research reports positive willingness to pay (WTP) for green energy electricity premia. These studies elicit WTP for various aspects of green energy, where green energy is a generic product (Byrnes et al., 1999; Ethier et al., 2000; Gossling et al., 2005; Zarnikau, 2003) or focus on the environmental attributes associated with green energy (Bergmann et al., 2006). As for this research, information about customers mindset which is mentioned above, gives slight evidence that customers might be willing to pay more for green hotels. Willingness-to-pay can be defined as the amount an individual is willing to pay to acquire some good or service. This amount can be elicited from the individuals stated or revealed preferences (Sloan et al., 2009). According to Richardson, a study conducted on climate change and recreation benefits in an Alpine National Park, have shown that temperature and precipitation were statisticallysignificant determinants of WTP. An increase in recreation benefits of 4.9% and 6.7% for two climate change scenarios have been estimated. This data can be related to resort hotels, that have golf course or other outdoor activities. In particular, countries in the South East Asian region (eg. Malaysia) enjoy such privileges of warm weather throughout the year. On a contrary, higher temperatures caused more harm to some of the resorts in colder regions of Europe and Canada. The customers desire to pay more for green hotel could be determined by internal and external factors (Alba, Hutchinson, and Lynch, 1991). Internal, arise from personal characteristics such as values and prior beliefs. In turn this suggests that consumers who have strong beliefs about the environment are likely to pay attention to the environmental attributes of products. On the other hand, external arise from a variety of factors such as advertisements, personal selling, and word of mouth. Thus, consumers who do not have

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strong beliefs about the environment may also be directed to pay attention to environmental attributes of products (Alba, Hutchinson, and Lynch, 1991). LOHAS is an acronym for Lifestyle of Health and Sustainability a multi-billion market segment in the United States alone. It aligns itself with the groups such as New Age belief with environmentalist interest groups and the alternative medicine movement. It is a market place for goods and services that appeal to consumers who value health, the environment, social justice, personal development and sustainability. These consumers are variously referred to as culturally creative, conscious citizens who are willing to pay more for goods that are deemed sustainable. Approximately 19% of the adults in the United States are currently considered LOHAS (LOHAS, 2009). Hotel properties where practices are environmentally sensitive will have an advantage in the marketplace over rival properties. According to the Travel Industry Association of America, within the United States alone there are 43 million people that are self-proclaimed ecotourists who are willing to pay 8.5% more for environmentally sensitive travel suppliers (TIAA, 1992). In a survey of US business travellers (Watkins, 1994) 75% of respondents said they were environmentally minded consumers and 54% said they were environmentally minded travellers. Of the sample, 71% of respondents said they would prefer to stay at the hotels that show concern for the environment. On the other hand though, majority were not willing to pay extra for their accommodation in order to fund these green policies and only 28% would be prepared to pay between $5 and $10 extra. According to survey done by Adam Weissenberg, Deloitte Tourism, Hospitality and Leisure leader, 28% of U.S. business travellers surveyed are willing to pay 10% more to stay at a green hotel. A study done by GfK, willingness to pay more for a certification of Corporate Social Responsibility (CSR) practices scored 36% of CSR-interested tourists willing to open their pocketbook for the piece of paper (compared to 15% of general travelling population). Thus, a property that

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institutes eco-friendly practices and communicates those efforts to the general public can gain an access to a growing market segment (Iwanowski and Rushmore, 1994). Apart from the lifestyle that people chose to live, concept of eco-label does assist the customer with making the right choice. Eco-label is a brand that is placed on a product, service or organisation. The purpose of an eco-label is to allow the consumer to choose the product, service or company that is recognised to be the most environmentally involved (Sloan et al, 2009). The trend towards environmental certification, or eco-labelling as it is commonly known, has increased greatly in the last 20 years, primarily because it is an important promotional tool for sustainable tourism and hospitality (Sloan et al, 2009). All of the eco-labels have three key functions in common, these are: environmental standard setting; third-party certification of these standards; and value-added marketing or environmental communication. In order to be qualified for and certified with any eco-label, a hotel would have to reach set environmental standards. The actual certification process makes sure that all required criteria are met before a hospitality company is awarded the eco-label (Sloan et al, 2009). However, there is over a 100 eco-labels worldwide, and over 60 just in Europe, the hotel or restaurant guests may struggle to identify which labels are valuable and credible and which are not (Sloan et al, 2009). It is claimed by the industry observers that few hotels use their labels as marketing tool even when environmentally certified. The problem being that the public and industry are confused by the message the labels are designed to convey. VISIT (the Voluntary Initiative for Sustainability in Tourism) was set to overcome this confusion, whereby various eco-labels are advisory via VISIT when they meet a particular requirement level. An advisory board including World Tourism Organisation (WTO), United Nations

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Environmental Programme (UNEP) and European Hotel and Restaurant Association (HOTREC), are just a few who supports VISIT (Sloan et al, 2009). The labels are often too expensive for individual hotels especially when cost/benefits are not properly understood. They also tend to attract customers interested in eco-tourism and have limited marketing power. The goal envisaged by eco-label certification as a sustainability tool has not yet been effectively reached (Sloan et al, 2009). Arguably, local and regional certification programs should be linked to an international accreditation system. The Green Globe 21 scheme was designed to overcome these difficulties, because the label claims to be global. The Figure graph below shows Green Globe certification in different regions of the world (Sloan et al, 2009).

Popularity of the Green Globe Label. Based on Green Globe (2006) and WTO (2005).

The popularity in Europe and Pacific can be explained. Green Globe 21 is headquartered in Australia, thus has its popularity in that region. In Europe on the other hand, there are other more popular eco-labels such as ECEAT and Blue Flag.

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In addition to the eco-labels that are designed specifically for hospitality, travel and tourism industries, the International Organisation for Standardisation has developed certification that do not apply to one industry in particular. ISO 14001 and 14004 both define the specifications and guidelines for an Environmental Management Systems (EMS) implementation, while the standards ISO 14010, ISO 14011 and ISO14012 define the principles and procedures of environmental audits, as well as the qualification criteria of the auditors (ISO, 2009).

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Chapter III Methodology The purpose of this research is to investigate the possibility of guests, travellers and other persons who use the facilities and services provided by the hospitality industry, in particular hotel accommodation and services, to a willingness to pay more for green hotels. 3.0 Study Area An area of the research will be conducted in the Peninsular region of Malaysia. Specifically this will be done in the Klang Valley region (Wilayah Persekutuan and Selangor states). A minimum of 10 hotels will be studied in each of the states and will include both business and resort hotels. The reason for doing the research in the Klang Valley region is because the concentration of many business hotels and human traffic is in this area. Another reason is because, the metropolitan area is considered the most pollutant area of the cities, due to many businesses operating side by side, producing more waste and using more resources to stay competitive. As for resort hotels, many of which are located further away from the city centre, and too, have many customers. Resorts are usually larger establishments because they have more activities for their guest to do, larger number of guests, up to 1000 or more at any one time and their demands. This tends to overuse resources available. The business hotels that will be studied are JW Marriot Kuala Lumpur, The Westin, Grand Millennium, Berjaya Times Square, Corus, Citrus, Hilton, Pyramid Tower and Imperial. Leisure & Resort hotels are: JW Marriot Putrajaya, Palace of The Golden Horses, Sunway Resort and Spa, Holiday Villa, Saujana.

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3.1 Procedure and Time Frame The method of data collection for this research will largely lay in the survey form distribution. Surveys will be randomly distributed to hotel guests of various nationalities and demographics, to find out who is willing to contribute to green concept. Not only, but it will give a less bias results. Surveys are to be filled in anonymously by the guest on the spot, and if guest have any doubts or questions about the research or questions, they are free to ask. Each guest will be given one survey questionnaire to complete (written in pen). An emphasis will be mostly on people of age groups 25-50 and 51 and above, with various backgrounds. This is because people in these age categories are the most frequent hotel and recreation visitors. Youth, 25 years and below will be studied less detailed than others. Surveys will consist of at least 10 questions having both objective and subjective questions. Each survey should take no more than 10 minutes to be completed. Besides distribution of surveys to the guests, questioning/interviewing of General Managers or any other higher level representative will be performed (in the hotels listed in the study area), depending on their availability and interest to comment. Data collected from both, guests and hoteliers, will be analysed manually to bring out the conclusion. The software used for the compilation of surveys collected from guests will be input into the SPSS or other relevant software for the purpose of statistical data results. Result comparisons will be done to answer the research questions and perhaps other side information about the trends (if any). All surveys collected from guests will be attached as an appendix to the final report as a proof of the study done, along with other relevant information.

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A research will be done in the Klang Valley region of Peninsular Malaysia, with a total population in this area of 5,245,053 (1,297,526 in Kuala Lumpur and 3,947,527 in Selangor), according to statistical data taken from Statoids.com. Having a population size of more than 1 million and less than 5 million, the minimum sample sizes for confidence interval of 5% and 1% on a sample finding of 50% will be: 384 (for 5%) & 9584 (for 1%) respectively. This means a minimum of 384 surveys must be distributed to have a legitimate research results. However, for this research a minimum of 500 surveys will be distributed to allow more variance and more detailed research. This research is to be performed in a time frame of second quarter of 2010 through second quarter of 2011. Funds and resources required for a research: Paper Cost - printing of surveys (double sided print, one sheet per survey); Travelling Cost public transport (train and bus); Inventory costs pens for customers to fill up the surveys. Paper cost Travel by train Travel by bus Inventory cost Total Cost RM50 RM30 RM10 RM20 RM110.00

The contribution made will only include self transportation to the hotels in the Klang Valley region of Peninsular Malaysia, permission from the hoteliers to conduct a research in their respective hotels and their willingness to interview them.

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As for a desired outcome of this research, expectations would be to find positive relationship between customers willingness to pay more for green hotels and hoteliers stimulus to engage in environmental practices as a result of customers desire to spend more. From the literature review, going green gives a competitive edge to hotels, also, it was said that customers are becoming more aware of eco-friendly concepts and practices, and show an elevated interest towards it. If the research will prove the idea, this could revolutionise the hospitality industry in unimaginable ways. Not only hotels and customers will benefit from such changes, but this will create a row of new job opportunities for the public and safer, healthier environment to work and live in for present and especially future generations.

3.2 Scope and Limitations Limitations of the research are mostly in the area of performing this research in public places (eg. shopping malls, streets). As initially planned, respondents had to be hotel guests interviewed at the hotels. Unfortunately, due to unawareness of hotels policies, no third party is allowed to conduct a research (surveying guests) at the hotels. This was a limitation as over five dozen copies of questionnaire have been distributed to hotel representatives to assist with the research, although none of them made it back. A limitation of performing such a research at the shopping malls, and streets, required to evaluate people based on their looks, behaviour and dressing, in order to approach respondents who are aware of the subject. Unfortunately, many still, have rejected to answer the survey. This resulted in more time to be spent to collect appropriate number of responses.

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Many Malaysians presumed that they were going to be asked to make a donation for a charity or orphanage, when they were approached for the reasons to answer the survey. Foreigners on the other hand were only unwilling to do this survey, due to the language barrier. Unavailability of hoteliers (General Managers) to be interviewed, have had an effect on the research question, as it is difficult to state whether from a hoteliers perspective, customers willingness to pay more for green hotels will in fact encourage hotels to be more environmentally friendly and proudly show off their certification from independent third party organisations for their green efforts. Despite Malay community contributing to over 60% of the nations population, in this research, they are represented by 61 respondents (22.85%). For the reasons that research has been mostly conducted near hotels and in shopping malls of the Golden Triangle and Subang, the concentration of Malay is significantly lower in such areas. Also, a number of Malay respondents have said they do not speak English, therefore were unable to complete a questionnaire. The research questionnaire was only conducted in English form and was not translated into the national language (Bahasa Melayu) to assist the Malay community better to understand the questionnaire. Malaysian Chinese, constitute the largest portion of Malaysians surveyed, for the reasons that most of them are employed in the private sector, unlike Malay community who are mostly employed in the government sector, were easily available and approachable. Malaysian Chinese contributed to 41.95% of all the respondents. Such variance can be seen as bias, although on the other hand it is not. Reasons being, as research was conducted in the areas as proposed in the proposal, this distribution in fact shows how Malaysian community has separated itself, with different nationalities working and living in different parts of the Klang Valley region.

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Chapter IV - Results The research questions are based on the above mentioned. The most influential and imperative question of the research will be: Are the customers willing to pay more to stay at a hotel that practices green management or in fact is green certified? Following this question, will be: If customers are willing to pay more to stay at a hotel that practices green management or is green certified, how much more are they willing to pay for it, and if they are not willing to pay more what is/are the reason(s) behind it? Last but not least, will be the question asking: How would the customers prefer hotels to utilise the financial support that they extend their hand to, be used by the hotels, and will paying more act as a springboard to encourage more hotels to get certified? In this chapter tables and diagrams will be used to represent the various demographic factors, as well as relationship and distribution between different aspects of the research questionnaire (eg. respondents age group, their willingness to pay for green hotels, and their interest in participating in environmental programmes carried out by hotels, are just some of the aspects that will be looked into. An in-depth analysis of these aspects will be looked at more closely in Chapter V (page 54). Over 500 questionnaire samples were distributed in a physical and electronic form. About 10% of all questionnaires were recovered via electronic source, the remaining 90 were answered with a pen on paper. A total of 267 questionnaires were analysed in this research, from over 300 answered questionnaires by respondents. Table 1.0 on the following page, briefly summarises the demographic factors and aspects of the respondents.

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Table 1.0 - Demographic Statistics Valid Percent (%) 47.6 52.4 100 Valid Percent (%) 22.47 41.95 7.12 22.85 5.62 100 Valid Percent (%) 32.21 40.45 26.59 0.75 100 Valid Percent (%) 38.58 16.1 17.98 27.34 100 Valid Percent (%) 10.49 7.49 0.37 58.43 15.36 1.87 4.49 1.5 100 Cummulative Percent (%) 47.6 100

Gender Total

Female Male

Frequency 127 140 267

Percent (%) 47.6 52.4 100

Nationality Foreigner Malaysian Chinese Malaysian Indian Malaysian Malay Malaysian Other Total

Frequency 60 112 19 61 15 267

Percent (%) 22.47 41.95 7.12 22.85 5.62 100

Cummulative Percent (%) 22.47 64.42 71.54 94.38 100

Age

25 & below 26 to 40 41 to 60 61 & above

Total

Frequency 86 108 71 2 267

Percent (%) 32.21 40.45 26.59 0.75 100

Cummulative Percent (%) 32.21 72.66 99.25 100

Frequency Household Income RM3,000 & below RM3,001 to RM4,500 RM4,501 to RM6,000 RM6,001 & above Total 103 43 48 73 267

Percent (%) 38.58 16.1 17.98 27.34 100

Cummulative Percent (%) 38.58 54.68 72.66 100

Frequency Mode of Travel Business Leisure and Business Honeymoon Leisure Family / Couple Leisure Individual Leisure Family / Couple & Individual Other travel (undefined) Education 28 20 1 156 41 5 12 4 267

Percent (%) 10.49 7.49 0.37 58.43 15.36 1.87 4.49 1.5 100

Cummulative Percent (%) 10.49 17.98 18.35 76.87 92.13 94.01 98.5 100

Total

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The Fig. 2.0 above, shows the frequency of the respondents in respect to their gender. Females contribute to a total percentage of 47.57% (127 respondents), whilst males contribute to a total percentage of 52.43% (140 respondents).

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Fig. 2.1 shows Foreigners (non-Malaysian citizens), and Malaysians in this research. Foreigners (have been grouped together for convenience of data analysis) include (American, British, Australian, Canadian, Chinese, Danish, Egyptian, French, German, Indian, Indonesian, Iranian, Japanese, Jordan, Kenyan, Korean, New Zelander, Pakistan, Russian, Singaporean, Sri Lankan, Swiss, Ukrainian, Yemen). Malaysians were divided into their respective ethnic groups. From graph, Malaysian Chinese contribute to the largest sample or respondents, with foreigners and Malaysian Malay, second highest.

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Fig 2.2 shows bar graph for distribution of age groups of the respondents. Ages 26 to 40 years have most number of respondents, and whilst 61 years and above has the least number of respondents.

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Fig 2.3 above, represents the household income of the respondents. Where majority of respondents have a household income of RM3,000 and below, whilst category RM3,001 to RM4,500 has the least number of respondents.

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A Table 2.0 above and Fig. 2.4 on the following page, shows the respondents preferred mode of travel. Leisure Family/Couple is the most preferred mode of travel for respondents, with business travel being second most preferred.

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Fig. 2.5 shows that majority of the respondents have not stayed at an eco-friendly hotel.

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In Fig. 2.6 above, respondents preference towards paying more for green hotels is shown. Most of the respondents are willing to pay more for green hotels.

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From Fig. 2.7 above and Table 2.1 below, show that most of the respondents prefer to pay less than 5% of the cost more for green hotels, whilst only two are willing to pay exactly 2% of the cost more for greenhotels.

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Fig 2.8 above and Table 2.2 on the following page, both show reasons of respondents who are unwilling to pay more to stay at a green hotel are mostly due to their financial status. And only a few have no interest in green at all.

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Table 2.3 - Variance between respondents who are unwilling and willing to pay more How much more willing to pay less than Other 5% 5-10% amount Willing to pay more Total no 8 8 3 3 0 0

2% 0 0

Total 11 11

The Table 2.3 above, shows the varience between respondents who are unwilling and willing to pay more. Table 2.3, will be explained in more detail in Chapter V (page 54)

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Fig 2.9 above, shows respondents who are in favour and disfavour for all hotels to go green. With majority who want all hotels to go green.

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Fig. 2.10 above, shows respondents green hotel consideration. Majority of respondents are not willing to make green hotel as their top priority when selecting a hotel to stay at.

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Fig. 2.11 above, shows that majority of the respondents are unaware of green certified hotels in Malaysia or abroad. Ecologo Canada, Blauer Engel Germany,Green Seal United States, Green Globe 21 (Earth Check) Australia, Green Hotels (by Ministry of Tourism Malaysia) are all examples of green certifications.

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Table 2.4 - Hotels that respondents feel are 'green' certified Frequency 11 7 3 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 45 Percent 4.12 2.62 1.12 0.75 0.75 0.75 0.75 0.75 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 16.79 Valid Percent Cumulative Percent 4.12 82.14 2.62 35.52 1.12 57.72 0.75 48.84 0.75 19.98 0.75 42.18 0.75 91.02 0.75 97.68 0.37 2.22 0.37 4.44 0.37 6.66 0.37 8.88 0.37 11.11 0.37 13.32 0.37 15.54 0.37 37.74 0.37 44.4 0.37 51.06 0.37 84.36 0.37 86.58 0.37 93.24 0.37 100 16.79

Shangri-La Holiday Inn Mines Wellness Hotel Frangipani Langkawi Resort & SPA Hilton JW Marriott Sunway Hotel Resorts & Spa Tune Baros Maldives Belamar Hotel California Belum Rainforest Resort City Hotel Seoul, Korea Courtyard by Marriott Chevy Chase Eastin Equatorial Hotel Penagu Kandalama (Sri Lanka) Le Meridien Sheraton Salah Phuket Thailand Tanjung Aru Resort Westin Total

Table 2.4 shows that Shangri-La and Holiday Inn are best known green certified hotels by respondents.

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Fig. 2.12 above, shows opinion of respondents, and most of them feel that paying more will motivate hotels to go green

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Fig. 2.13 above, shows that majority of respondents feel todays hotel industry is slightly and not at all green.

Table 2.5 Respondents opinion on how 'extra' money should be utilised Valid Percent Cumulative (%) Percent 22.1 21.72 14.98 1.5 0.75 0.37 61.42 35.98 71.39 95.76 98.2 99.42 100

Frequency Enhance 'green' management programmes Give back to the public Provide incentives/loyalties Enhance green management programmes & give back to public Other (various) suggestions Give back to public & provide incentives/loyalties Total 59 58 40 4 2 1
165

Percent (%) 22.1 21.72 14.98 1.5 0.75 0.37 61.42

Table 2.5 shows that majority of respondents want hotels to utilise the money to enhance green practices.

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Fig. 2.14 shows that respondents are quite willing to participate in environmental protection programmes carried out by hotels.

41

Fig. 3.0 above, shows that there is almost equal number of respondents for each gender who are willing to pay more.

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Fig. 3.1 shows that majority of respondents who are willing to pay more are foreigners, Malaysian Chinese and Malaysian Malay, whilst the others are less likely to pay more.

43

From Fig. 3.2, Foreigners and Malaysian Malay are mostly represented by male respondents, whilst majority of Malaysian Chinese, Indian and others, are represented by females.

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Fig. 3.3 shows that majority of respondents whose household incomes are above RM3,001 are more likely to pay more as compared to those whos household income is below RM3,000.

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Table 3.0 Distribution of respondents household income levels and their nationality
RM3,000 & below Nationality Foreigners Percentage(%) Malaysian Chinese Percentage(%) Malaysian Indian Percentage(%) Malaysian Malay Percentage(%) Malaysian Other Percentage(%) Total Total Percentage (%) 15 5.62 53 19.85 9 3.37 20 7.49 6 2.25 103 38.58 Household income RM3,001 RM4,501 RM6,001 - 4,500 - 6,000 & above 5 13 27 1.87 4.87 10.11 15 16 28 5.62 5.99 10.49 5 2 3 1.87 0.75 1.12 15 13 13 5.62 4.87 4.87 3 4 2 1.12 1.5 0.75 43 48 73 16.1 17.98 27.34

Total 60 22.47 112 41.95 19 7.11 61 22.85 15 5.62 267 100

Table 3.0 above, shows that most of the foreigners have a household income of RM6,001 and above, whilst other nationalities are mostly of household income levels of RM3,000 and below.

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Table 3.1 Distribution of respondents household income and their age group

RM3,000 & below Age 25 & below Percentage (% ) 26 - 40 Percentage (% ) 41 - 60 Percentage (% ) 61 & above Percentage (% ) Total Total Percentage (% ) 62 23.22 31 11.61 10 3.75 0 0 103 38.58

Household income RM3,001 RM4,501 RM6,001 - 4,500 - 6,000 & above 7 2.62 28 10.49 8 3 0 0 43 16.11 5 1.87 19 7.12 23 8.61 1 0.37 48 17.97 12 4.49 30 11.24 30 11.24 1 0.37 73 27.34

Total 86 32.2 108 40.46 71 26.6 2 0.74 267 100

From Table 3.1 above, majority of the respondents with income levels of less than RM4,500 are in age group of 26 to 40 years. Whilst majority of respondents of ages 41 to 60 years have household income of RM4,500 and above.

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Table 3.2 Distribution between respondents preferred mode of travel and their age group
Age group 25 & below Travel Business Percentage (% ) Leisure and Business Percentage (% ) Honeymoon Percentage (% ) Leisure Family/Couple Percentage (% ) Leisure Individual Percentage (% ) Leisure Family/ Couple & Individual Percentage (% ) Other travel (undefined) Percentage (% ) Education Percentage (% ) Total Total Percentage (% ) 5 1.87 3 1.12 0 0 54 20.22 17 6.37 1 0.37 4 1.5 2 0.75 86 32.2 26 - 40 11 4.12 12 4.49 1 0.37 67 25.09 11 4.12 1 0.37 3 1.12 2 0.75 108 40.43 41 - 60 12 4.49 5 1.87 0 0 35 13.11 12 4.49 3 1.12 4 1.5 0 0 71 26.58 61 & above 0 0 0 0 0 0 0 0 1 0.37 0 0 1 0.37 0 0 2 0.74 Total 28 10.48 20 7.48 1 0.37 156 58.42 41 15.35 5 1.86 12 4.49 4 1.5 267 100

Table 3.2 above, shows that most of the respondents of age 26 to 40 years are Leisure Family/Couple travellers. Respondents of ages 41 to 60 years are business travellers.

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Table 3.3 Distribution of respondents mode of travel and their nationality

Malaysian Foreigners Chinese Travel Business Percentage (% ) Leisure and Business Percentage (% ) Honeymoon Percentage (% ) Leisure Family/Couple Percentage (% ) Leisure Individual Percentage (% ) Leisure Family/ Couple & Individual Percentage (% ) Other travel (undefined) Percentage (% ) Education Percentage (% ) Total Total Percentage (% ) 13 4.87 4 1.5 1 0.37 27 10.11 6 2.25 0 0 6 2.25 3 1.12 60 22.47 9 3.37 9 3.37 0 0 66 24.72 19 7.12 4 1.5 4 1.5 1 0.37 112 41.95

Nationality Malaysian Malaysian Malaysian Indian Malay Other 1 0.37 1 0.37 0 0 12 4.49 4 1.5 0 0 1 0.37 0 0 19 7.1 5 1.87 6 2.25 0 0 41 15.36 8 3 1 0.37 0 0 0 0 61 22.85 0 0 0 0 0 0 10 3.75 4 1.5 0 0 1 0.37 0 0 15 5.62

Total 28 10.48 20 7.49 1 0.37 156 58.43 41 15.37 5 1.87 12 4.49 4 1.49 267 100

From Table 3.3 above, most of the foreigners are business travellers, whilst all Malaysians are mostly Leisure travellers.

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Table 3.4 Relationship between unwillingness to pay more and age group of the respondents

Age 25 & below Financial status, Hotels generate sufficient profits, Why not I do not see why I have to pay pay more? for the hotel's actions Percentage (%) Financial Status Percentage (%) I have no interest in hotels' 'green' practices Percentage (%) Other (undefined) reasons Percentage (%) Hotels generate a sufficient annual income Percentage (%) I do not see why I have to pay for hotel's actions Percentage (%) Total Total Percentage (%) 26 - 40 41 - 60 61 & above Total

0 0 13 4.87 6 2.25 0 0 4 1.5 14 5.24 37 13.86

0 0 21 7.87 1 0.37 3 1.12 4 1.5 15 5.62 44 16.48

1 0.37 5 1.87 1 0.37 4 1.5 4 1.5 7 2.62 22 8.23

0 0 0 0 0 0 0 0 0 0 0 0 0 0

1 0.37 39 14.61 8 2.99 7 2.62 12 4.5 36 13.48 103 38.57

Table 3.4 above, shows that majority of the respondents who are unwilling to pay more are of ages up to 40 years of age. Whilst 41 and above are less unwilling to pay more.

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Table 3.5 above, shows that respondents who are willing to pay the most are of ages 41 to 60, whilst ages 26 to 40 are more willing to pay less than 5%.

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From Table 3.6, foreigners and Malaysian Chinese are the respondents who are most likely to pay 5% to 10% more for green hotels as compared to other nationality groups.

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Table 3.7 - Respondents view on areas hotels should emphasise on improving

Areas to emphasise on enhancing Energy saving Importance level 5 Percentage (% ) 4 Percentage (% ) 3 Percentage (% ) 2 Percentage (% ) 1 Percentage (% ) Ranking Total Total Percentage (% ) 101 37.83 52 19.47 51 19.1 20 7.49 43 16.1 1 267 100 3R 100 37.45 47 17.6 44 16.48 46 17.23 30 11.24 2 267 100 Waste management 62 23.22 63 23.6 59 22.1 40 14.98 43 16.1 4 267 100 Water management 69 25.84 58 21.72 58 21.72 46 17.23 36 13.48 3 267 100 Other reasons 8 3 2 0.75 2 0.75 4 1.5 251 94.01 5 267 100

Table 3.7 shows that majority of respondents feel that energy saving and 3R (Reduce, Reuse, Recycle) are most important environmental conservation practices as compared to water and waste management.

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Chapter V Conclusion and Recommendations 5.0 Introduction of Chapter V This chapter will further elaborate and justify the research questions based on the findings in Chapter IV. The finding consists of three major areas, which cover the willingness to pay for green hotels, average rate for green hotel, and key attributes for green hotel practices.

5.1 Perception of green standard charges for hotels Based on Fig. 2.0 (page 25), which shows gender distribution of the respondents. Ratio of male to female in this research study is 1.10. An allowed percentage variance is anywhere in the range of 30%. Ratio of 1.10 is a 4.87%, which can be considered insignificant. Thus making the gender distribution relatively balanced, resulting in less bias results amongst the two genders. When a relationship between gender and willingness to pay more was made as shown in Fig. 3.0 (page 42), responses were almost identical. There was no skew of the graph towards either gender. However, according to this research study, males were just slightly more unlikely to pay more as compared to females. More or less, the results are relatively balanced, and both genders are equally likely to pay and not to pay more for green hotel. From Fig 2.1 (page 26) showing nationality distribution of the respondents, the following was derived. The study primarily focuses on studying the trends and attitudes of people towards green hotels. Therefore any resident or tourist of Malaysia is eligible to take part and be included in this research, irrespective of their nationality and country of citizenship.

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Foreigners, whose nationalities were mentioned in Fig. 2.1, were grouped together as their nationalities individually constitute for a very small percentage, and due to the fact that this study does not particularly look into the demographics of different foreign nationalities. However, due to research area of this project is based in Klang Valley (Peninsular Malaysia), local community represents the largest portion of respondents and also looks into their different nationalities, as in Malaysia, there are officially 3 different ethnic groups living in the country, each having their own communities and unique lifestyles. The study also groups all the Malaysians in this study to compare a cumulative Malaysians trend towards research questions objectives. As Malaysian Indian are one of the lowest percentage of population living in Malaysia compared to other nationalities, respectively, in the research, they too, represent the minority (7.12% of all respondents). Similarly, Malaysians of mixed nationality represent the minority, and in this research are represented by only 5.62% of all respondents. A relationship between respondents nationality and willingness to pay was illustrated in Fig. 3.1 (page 43). Ratio of foreigner to willingness to pay is as follows: 12 respondents said No and 48 respondents said Yes, a ratio of 4. Malaysian Chinese who have said No were represented by 56 respondents and 57 respondents said Yes, a ratio of 1.02. Malaysian Indian respondents who said No were 8, and those who said Yes were 11, a ratio of 1.38. Malaysian Malay community has answered in the following way: 24 No and 37 Yes, a ratio of 1.54. Other Malaysians were 4 to say No and 11 to have said Yes, a ratio of 2.75. In the overall, ration for Malaysians that are willing and unwilling to pay more for green hotels, is 1.27. These figures suggest that Malaysians are less likely to be paying more for green hotels as compared to foreigners.

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In accordance to Table 3.6 (pg. 52), foreigners and Malaysian Chinese are amongst the top respondents who are willing to pay more for green hotels. With 19.10% of foreigners and 23.22% of Malaysian Chinese. Malaysians in total would contribute to 46.44% of all respondents who are willing to pay more for green hotels, which is more than twice the number of foreigners. Although, as mentioned above, ratio wise, foreigners are more likely to be contributing as compared to Malaysians. In order to understand who are the respondents of different nationalities and ethnicity groups are, Fig. 3.2 (page 44) helps to see the distribution. As it can be seen, majority of foreigners and Malaysian Malay are males, while Malaysian Chinese, Malaysian Indian, and other Malaysians, with majority of women as respondents for the ethnicity group. This once again suggests that there is no biases among genders and nationalities as well as who are the target market for hotels to focus on. Respondent preference in the practice of green Apart from spending power of the respondents, it is also important to know, who are the respondents that prefer business or leisure travel in relationship to their nationalities. As it was already stated in Table 3.3 (page 49), leisure travel with family or spouse is the most preferred travel of all the respondents surveyed. This proves the fact that Malaysia is well known for its blend of multicultural society, with beautiful landscapes and architecture that is one of many elements that attracts about 25 million tourists every year. Despite results being as such, it is important not to omit business travel from the big picture, as Malaysia plays a host to major sporting, engineering and Information Technology events in the South East Asian region. In Fig. 2.2 (page 27) that shows distribution of age groups of the respondents. Straight away, the point should be brought to the age group of 61 year and above. Previously, in the research

56

proposal, it was stated that research will primarily focus on ages 26 to 50 and above, however, as respondents were required to provide their e-mail address as verification and authentication procedure, and respondents over the age of 61 were not able to provide one. A number of respondents who have either looked to be over the age of 61, or those who initially did a survey, but such survey was not valid for a research, due to missing e-mail field. In this research only 2 respondents of this age group, contributing to a total percentage of only 0.75% have had an e-mail address to prove their questionnaire. As previously mentioned, ages 25 an below were to be paid less attention as ages 26 to 50, therefore, ages 25 and below contribute to 32.21% whilst sum of age groups of 26 to 40 and 41 to 60, contributed to 67.04% of all respondents. Reasons as to why there are only four age group categories, and why such categories were divided in such a way, is because: people of ages 25 and below, are mostly students of schools, colleges and universities, as well as fresh graduates with less than 3 years of working experience. Which could suggest that they are least likely to visit hotels and especially be very concerned about green hotels and willingness to pay more, due to relatively low levels of exposure to the industry and lower spending power. Students of universities and colleges are more likely to attend house parties and visit cinemas, F&B outlets, bars and amusement parks, therefore the relevance towards hotels greening practices are not directly related to their interest of activities. A fact that international students of the universities as well as local students who have knowledge and interest in todays world of environmental protection programmes, cannot be neglected. Ages 26 to 40, would be mostly young families and working class of people, who are more likely to travel for leisure and business purposes, thus have higher potential to spend more on green hotels and aware of the current hotel trends and practices. Ages 41 to 60 is assumed

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to be people with families whose children are in their teenage years, resulting in a completely different trend in travel needs and spending levels, also, people of such age group category are more likely to be of a higher managerial positions, which should result in higher spending power and greater knowledge of environmental protection. Respondents of the ages 61 and above are people who are soon to retire or already retired, and frequently travel in pairs or groups around the world. This suggests that they have the exposure to the various cultures and means of doing work, thus making them more knowledgeable of environmental protection programmes and health safety. Relationship between respondents gender and the type of travel that they prefer is illustrated in Table 3.2 (page 48). This table suggests that travellers of the ages 41 to 60 are more likely to go on leisure travel with their family or spouse with a ratio of 2.03, as compared to 26 to 40 years age group ratio of 1.61 and 25 years and below with ratio of 1.59.Respondents of age group 26 to 40 years are just slightly outnumbered by respondents of ages 41 to 60 years with 4.12% and 4.49% of all the respondents respectively. By looking at Fig. 2.3 (page 28) showing household income of the respondents. Initially the report was asking for individuals income level, however due to majority of the respondents voicing out their discontent, saying that it intrudes their privacy and that it should be asking for household income level instead. Therefore the questionnaire has been mended to be less personal and more appealing to respondents. The purpose of asking for income levels of the respondents was solely for the purpose of identification of different classes of people and whether it has significant effect which will influence them to pay or not to pay more for green hotels. Respondents with household income levels of RM3,000 and below were represented by majority (38.58%) followed by 27.34% of respondents with household income

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levels of RM6,001 and above. Respondents earning RM3,001 to RM4,500 and RM4,501 to RM6,000 were almost on par with 16.10% and 17.98% respectively. Reasons as to why the income levels have been grouped in such a way are explained as follows: RM3,000 and below, would mostly be applicable to the respondents who are under the age of 25 and early 30s as these people would tend to be young working adults who are living away from their parents or are staying together with their spouse. RM3,001 to RM4,501 would be more applicable to respondents who have started families and have children. As such individuals would already be working for at least 5 years, and have stable career path. RM4,501 to RM6,000 would be more applicable to respondents of age 41 and above, as they are more likely to be adults with at least 10 years of working experience and are more likely to be of managerial positions, thus is their income levels to be higher. Income levels of RM6,001 and above, was mostly for respondents who are of higher managerial position and have one family member working and another taking care of children, as well as foreigners working in Malaysia and tourists or business travellers from overseas. To make things more clear, it was important to see if the above mentioned was accurately reflected relationship between respondents nationalities and household income levels. From Table 3.0 (page 46), we can see that majority of the respondents have a household income of RM3,000 and below, contributing to 38.58% of all respondents. The household income category that had fewest respondents was RM3,001 to RM4,500, with only 16.1% of all respondents. RM6,001 and above in household income, contributed to a total percentage of 27.34% of all respondents. Solely based on the information presented in Table 3.0, foreigners and Malaysian Chinese are respondents with the highest household income levels. Another bar graph is necessary to make a statement whether respondents with higher income levels are more likely to be paying more for green hotels. Fig 3.3 (page 45) shows just that.

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There is a clear difference in the income levels and respondents willingness to pay more for green hotels. The ratio of respondents willing to unwilling is the highest in respondents with household income levels of RM4,501 to RM6,000. A ratio of 2.69 or 72.92% of respondents in this group who are willing to pay more. Respondents with household income levels of RM6,001 and above is the second highest group in terms of willingness to pay, with a ratio of 1.76 or 63.01% of respondents that are willing to pay more. As before mentioned, people of household income levels of RM4,501 to RM6,000, are people of ages 41 to 60 years of age, who would mostly be represented by a family of 3 to 4, with children in their teen years, resulting in higher spending and different trends in travel and knowledge of the environment. Tables 3.4 (page 50) and Table 3.5 (page 51) both quite clearly show that respondents of the age group 41 to 60 years of age, are the potential hotel guest that are most likely to pay more for green hotels. Table 3.4 shows that age group 41 to 60 years, has the lowest percentage of respondents that are unwilling to pay more, with 8.23%, as compared to the other two age groups whose percentages are 13.86% for 25 years and below, and 16.48% for 26 to 40 years. In Table 3.5, respondents of age group 41 to 60 years are almost on par with respondents of 25 years and below with 19.48% and 19.85% respectively. However this may seem a little bias, as there are far fewer respondents in age group 41 to 60 years as there is for age group category of 25 years and below. However, the results are not bias at all when a ratio is taken into consideration. A ratio of 2.36 is deduced (19.48% 8.23%), whereas for age group of 26 to 40 years it is a ratio of 1.55 (25.47% 16.48%), and for 25 years and below it is a ratio of 1.43 (19.85% 13.86%). On top of it all, respondents that fall under the age group of 41 to 60, are the respondents with highest percentage, who are willing to pay 5% to 10% more for green hotels (10.11%).

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This can further be supported by Table 3.1 (page 47) where respondents of ages 41 to 60 years are amongst the highest income earners in both RM4,501 to RM6,000 and RM6,000 and above categories, with a percentage of 8.61% and 11.24% respectively. Table 2.0 and Fig. 2.4 (pages 29 and 30) shows preferred mode of travel of respondents. In the literature review section of this report, it states that in Unites States, a similar research has been done on business travellers to find out how much more are they willing to pay for green hotels. However, as this research is carried out in Malaysia, whos tourist arrivals to the country have nearly reached 25 million tourists in the recent years, could show that respondents who are likely to be business travellers is expected to be less. As shown in Table 2.0, the breakdown of different travel types, leisure travellers contribute to a cumulative percentage of 83.60% (7.5% + 0.4% + 58.4% + 15.4% + 1.9%) of all respondents. Business travel is the second most preferred mode of travel by the respondents with a cumulative percentage of 18% (10.5% + 7.5%). Other travel included travelling for sporting events, and others were left undefined by the respondents. Education was a choice of travel for 4 respondents. Furthermore, Fig. 2.5 (page 30) shows respondents who have stayed at eco-friendly hotels. Eco-friendly in this case refers to hotels that are not necessarily green certified, but also hotels that have green practices in place (eg. towel and linen recycling, encouraging guest to use towels more than once before it is taken for wash cleaning). From this graph, we can see that majority of respondents have not stayed at such hotels, contributing to just over half of the respondents (54.29%). This could suggest that many hotels are not being proactive in terms of going green and make customers unaware that it is absolutely necessary to conserve the environment.

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Willingness to pay for green hotel Fig. 2.6 (page 31) shows respondents willingness to pay more for green hotels. This is the most controversial question of the whole research project, as it deals with a sensitive issue (money) and the reason that should not even be a questionable subject but rather a compulsory measure. Asking customers for their willingness to pay more for something that in fact should already cost less, is very subjective and each respondent has their own opinion about it. Despite all, majority of the respondents are willing to pay more to stay at a hotel that is either green certified or practices green management. These respondents contribute to 61.42%. This figure is not particularly strong to be easily said as Malaysians and foreigners living, working or visiting the Klang Valley region are definitely willing to pay more for such hotels. Fig. 2.7 will look a little bit more closely into this. Fig. 2.7 and Table 2.1 (page 32) shows amount that respondents are willing to pay more for green hotels. Majority of the respondents are willing to pay extra no more than 5% of the cost of the hotels room. 22 less respondents have answered that they are willing to pay in a range of 5% to 10% of the cost. Respondents who have answered that they are willing to pay exactly 2%, are the respondents that are most likely to pay those 2% extra as they stated, because such option was not provided in survey, they were expected to write it in themselves in a case if they want to pay certain amount for it. Respondents, who have said 5% to 10%, are most likely to pay a minimum of 5% extra and an average of 7.5% extra for these 75 respondents. Respondents, who are willing to pay less than 5%, are more likely to pay about 3% to 4%. However, as already mentioned in the literature review earlier in the report, customers willingness to pay more and their actual spending can vary, therefore it is not possible to say

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with a 100% assurance that all 165 respondents who are willing to pay more will in fact pay that amount if hotels were to raise their prices by the amount that guest are willing to pay. The variance between respondents who are willing to pay more and the respondents who have written the amount that they are willing to pay varies by 11 respondents. Suggesting that 11 respondents, who are unwilling to pay more, would in fact not mind to pay a little extra. All of these respondents have said the reason they answered in such a way is, because they would want hotels to take initiative to go green and not have them (respondents) paying on their behalf for their actions to green the hotel. Although if the prices were to increase by 5% or so, they would still be willing to pay more to stay in such hotels. Fig. 2.8 (page 33) shows respondents who are unwilling to pay more for green hotels. Majority of the respondents have highlighted the following reasons as the most influential: Financial Status (14.60%) and I do not see why I have to pay for hotels actions (13.50%). Although these two factors contribute to a cumulative total of 28.50% (14.60% + 13.50% + 0.4%), they are not surpassed by respondents who are willing to pay 5% to 10% more (28.10%). This suggests that the likelihood of customers paying more for green hotel is as likely as customers who are unwilling to pay more for green hotel. Which tells us that there is equal number of people who on both sides of the fence. Another interesting figure to highlight is that, out of 267 respondents, there was 8 who have no interest in hotels green practices, contributing to 3.00% of the sample population. This figure can be considered insignificant, but this figure also shows that research is not too bias, to a degree that no respondents have no interest in green hotels. Table 2.3 is explained on page 34. As many as 8 respondents (3.00%) have stated they would be willing to pay less than 5% of the cost, and only 3 respondents (1.12%) would settle if the prices increase by no more than 10%.

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Fig 2.9 (page 35) shows that well over 80% of all respondents want to see all hotels to be green certified or to at least practice some elements. However, a much more insignificant percentage was recorder by 35 respondents (13.11%). Some of the respondents were those who are not interested in hotels green practices (8 respondents), therefore questionnaire was designed in such a way as to disallow these people to answer some of the questions as they would not be very relevant. Therefore the remaining 27 respondents, some of whom said the reason for their choice of answer was: if all hotels were to go green the hotels would be slightly more expensive and not very affordable. All but 8 of these respondents were those who opt to pay more for green hotels. In the overall, the trend is a positive one and most of the respondents would be willing to see hotels taking a step forward towards sustainable future in the hospitality industry. In Fig. 2.10 (page 36), quite a large percentage of respondents (57.30%) will not consider green hotel as their primary choice for hotel, and the remaining 42.70% would actually be looking forward to green hotel. What can be said based on the graph, is that awareness level in Malaysia, is not at a level that would have at least half of the respondents to answer Yes. This could also suggest that respondents (potential hotel guests) cannot differentiate the importance of staying at hotels that are green from those that are not. And could perhaps mean there are not that many hotels in Malaysia, which practice environment conservation. According to survey done by Kimpton Hotels and Restaurants, that 16 percent of hotels guests stay with the hotel because of their eco-minded practices. In this research, over 42% of people stated that they will consider green hotels as primary choice. Which could suggest that response is more positive here in Malaysia. However according to Watkins (1994), 71% of respondents said they would prefer to stay at the hotels that show concern for the environment. Which means, in Malaysian context, customers are unlikely to stay at green hotels as respondents living in America.

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5.2 Key attributes to the green hotel practices From Fig. 2.11 (page 37), which illustrates that majority of respondents 80.90% do now know of any green certified hotels in Malaysia or abroad. 38.20% of Malaysian Chinese, 6.74% of Malaysian Indian, 17.98% of Malaysian Malay and 4.49% of other Malaysians, in a cumulative total percentage of 67.41%, do not know any green certified hotels. Foreigners contributed to a 13.48% in total. However, if these figures were to be looked at in a ratio form, the figures would look much more different. 180 Malaysian respondents do not know of any green certified hotels, versus 27 Malaysians that know of green certified hotels, in a ration of 6.67. Foreigners on the other hand that do not know of green hotels are 36 respondents, and those that know of green hotels are 24 respondents, with a ration of only 1.5. This tells us that nearly every 2 nd foreign respondent knew of a green certified hotel, whilst almost every 7th Malaysian knew a green certified hotel. This quite clearly shows the gap between Malaysians and foreigners, as Malaysians are far less aware of such hotels, due to various factors that can include hotels publicity and pressure from government to demand more eco-friendly businesses in the country. Hotels that were said as green certified by the respondents are listed in the Table 2.4 (page 38). Shangri-La and Holiday Inn have been listed the most number of times by the respondents of this research study. 7 and 5 foreign respondents have answered Shangri-La and Holiday Inn respectively. Unlike Malaysians, have answered twice for each. At least half of the hotels listed by the respondents are green certified hotels in Malaysia and/or overseas. Suggesting that respondents are aware of eco-friendly hotels. Despite that, it is important to note that Melia hotel (was not mentioned by respondents), Holiday Inn at Glenmarie, Crowne Plaza have an international green certification from Green Globe 21. Shangri-La, Mandarin Oriental and Mines Wellness Hotel have green certification from Ministry of Tourism Malaysia Green Hotels.

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Melia Hotel Kuala Lumpur, is one of the pioneering hotels in Kuala Lumpur to have green certification. The hotel also incorporated tree planting program, as their Corporate Social Responsibility (CSR) on regular basis according to Mohd. Norzainiazzwa Mohmad (2011), during an interview on 17th June 2011, at Malaysian Association of Hotels Head Quarters. Surveyed respondents included in this research, have provided almost equal answers when asked will paying more encourage non eco-friendly hotels to get certified or to start practicing some environmental programmes. This is illustrated in Fig. 2.12 (page 39). From such a response it is quite difficult to tell whether hotels would actually be willing to change their way of running business, although in the eyes of the public, most of them do in fact see this as a motivation. Green certification from EarthCheck In an interview with Datuk Peter Brokenshire, interviewed by Dimitriy Sinkov at Kuala Lumpur Convention Centre on 2nd June 2011, when asked a same question but from a perspective of a hospitality service provider, did say that it could as well be a good motivation to encourage hotels to change. However Datuk Peter Brokenshire noted that hotels should not be looking for customers to reach them, but instead be proactive, provided they have the financial support to undertake the change. Kuala Lumpur Convention Centre has an internationally recognised green certification from EarthCheck, which makes it the first Convention Centre in Asia to be green certified. According to Datuk Peter Brokenshire, the Convention Centre saves millions of ringgit annually by following regulations of EarthCheck, staff training as well as adding a little touch of their own, by growing exotic plants on the roof top of the Convention Centre to be used as centrepiece item for meetings and conferences.

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Enhance green management programmes When a question came to ask respondents how would they prefer to see the money that they are willing to pay extra for green hotels be utilised, is shown is Table 2.5 (page 40). Majority of respondents stopped with an answer of Enhance green management programmes/practices 22.10% of respondents, and another 21.72% of respondents said they would like to see these money go for charities. And almost 15% of respondents said they would like hotels to provide more of incentives and loyalties in return. Just a few other respondents have mentioned that if hotels were to use these money to plant trees, they would be satisfied with the outcome. One respondent said he would like to see a cradle-to-cradle approach, meaning that if guests are willing to pay more for green hotel now, in later years, rooms should cost less, as the hotels operating cost will reduce dramatically. Whichever answer is to be looked at, the end result, as to what customers wish to see, is that these money be spent on a good reason, and not viewed as a tip. Over 30.71% of respondents, in Fig. 2.14 (page 41) would be more than willing to be involved in environmental protection programmes carried out by hotels, even if it was required for them to pay a minimal fee to become join. A much bigger percentage of respondents (49.44%) have their second thought on whether they would join such programmes for a minimal fee, whereas at least half of the respondents, did wish to join if it was free of charge. What we can tell from here is that 82 respondents who are willing to join, would be the target market of people that are truly loyal and supportive of organisations that help to protect the environment, even one small step at a time. As previously mentioned in literature review (page 2) in a study done by J.D. Power and Associates almost three quarters of all the hotel guests surveyed, are willing to participate in their hotel's environmentally friendly programs. However, according to this research, only about one quarter of all respondents would join hotels environmentally friendly programs.

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The ranking of standard green practices Final element to complete the picture is illustrated in Table 3.7 (page 53). From the responses collected by respondents via completion of questionnaire have highlighted the areas of major concern for the environment, that they wish hotels would pay closer attention to. The ranking system was devised in such a way that number 5 would represent the most important factor, whilst number 1 would represent the least important factor. Respondents who have not answered this question or left at least one option unranked, were given a value of 1. Respondents, who have ticked the choices instead of numbering them, were given a value of 5. Each value was calculated and a cumulative highest value of all the respondents for that particular factor was given a rank. Factor with the highest cumulative value was ranked 1st, and factor with lowest cumulative value was ranked 5th. According to the responses provided by the respondents, energy saving was ranked 1st, with a cumulative value of (949). Very closely ranked in 2nd is 3R (Reduce, Reuse, Recycle) with cumulative total value of 942. The 3rd was water conservation and management, with cumulative total value of 879. Waste management was none the less important factor, with marginally fewer responses and ranked in 4th with cumulative value of 862. Other reasons such as planting trees and cradle-to-cradle approach were much less significant, and were ranked 5th with cumulative total value of 313. In an interview, Datuk Peter Brokenshire commented that: hotels should implement an approach that is the easiest for them to undertake. Recycling for an instance, is one of the simplest practices to change towards environment friendly practices.

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5.3 Conclusion From enhanced in depth look of various elements of the research questionnaire, based on responses by 267 respondents a point to be drawn to conclusion answering the question of willingness to pay more for green hotels, is indeed supported by the results collected from the respondents. As over 60% of the respondents have agreed to pay more for green hotels. With supporting information from Malaysian Association of Hotels (MAH), in an AVERAGE OCCUPANCY RATE REPORT 4TH QUARTER 2009/2010 (MAH, 2011) states of Selangor and Kuala Lumpur have had an average occupancy rate of 78.23% and 71.97% respectively. An average of two would be 75.1%, which is very close to nations average occupancy rate of 72.28%. Both states have seen an increase in occupancy in comparison to the same period of previous year (2009), with 5.08% and 2.43% respectively. An average increase of 3.76%. According to an AVERAGE ROOM RATE REPORT 4TH QUARTER 2009/2010 provided by MAH, shows that Selangors and Kuala Lumpurs average room rates are RM200.71 and RM235.40. An average of RM218.06, which is quite a lot more as compared to the nations average room rate of RM204.73. For state of Selangor, prices have dropped by RM10.01 whilst in Kuala Lumpur prices have gone up by RM6.47 in comparison to previous year (2009). A RM1.77 drop in average price from previous year (2009). From the result analysis in Chapter V, it was said that 36.30% of all respondents are willing to pay less than 5% for green hotels, and 28.10% of all respondents were willing to pay 5% to 10% more for green hotels. From this information it can be said that respondents who are willing to pay less than 5% more for green hotels, would amount to less than RM10.90 (RM218.06 4.99%). And similarly, respondents who are willing to pay 5% to 10% more for green hotels would in

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fact be willing to pay RM10.90 to RM21.80. These figures are quite similar to researches done in United States and part of Europe, by Watkins (1994), Adam Weissenberg, Deloitte Tourism, Hospitality and Leisure leader, and GfK, where 28% of respondents were in fact willing to pay 10% more or $5 to $10 more. This shows that despite regions of the world, frequency of the respondents as well as the amount they are willing to pay more for green, is quite similar. A scenario of green Value: Knowing an average occupancy rate, as calculated above (75.1%) and an average room rate of RM218.06 it is possible to find out the percentage of respondents who would actually be willing to pay more for green hotels and how much could the hotel possibly generate in a year solely from these environment conscious hotel guests paying more. By performing some basic calculations, hotels could be earning from RM209,290.90 to RM418,581.80 more per annum only from the 28.10% of respondents who are willing to pay 5% to 10% more to stay at a green hotel. It was estimated that these hotels would be green certified hotels, with an average of 250 rooms, and occupancy rate of 75.10%, out of which, only 28.10% would be guests that are willing to pay 5% to 10% more, equating to 21.20%. Calculations are shown below: 5% = 250 ((28.10% 75.10%) 100%) 10.90 7 52 = RM209,290.90

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 10% = 250 ((28.10% 75.10%) 100%) 21.80 7 52 = RM418,581.80 According to statistics from Malaysian Association of Hotels, according to March 2011 report, there are 4 green hotels in Kuala Lumpur and there is only 1 green hotel in Selangor. Mines Wellness Hotel (over 100 guest rooms), Melia Kuala Lumpur (300 guest rooms), Crowne Plaza Kuala Lumpur (560 guest rooms), Holiday Inn at Glenmarie (260 rooms), Shangri-La (662 guest rooms) are some of these hotels in Klang Valley region of Peninsular Malaysia. From afore mentioned, hotels might be interested in looking at this trend, of environmentally cautious consumers, as it could play to their benefit further more. And for hotels that would be interested in becoming green certified, could see the benefits that they could get out of this.

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5.4 Recommendations Some of the recommendations that can be listed for future improvement of such a research, is to try to liaise with hotels in the region, to be able to acquire statistics and information from actual hotels guests. Collecting a larger sample of respondents questionnaires, to further verify the ratio of respondents to their willingness to pay more. Introducing new questions to the questionnaire asking for respondents profession, how often they go on travel, as well as how much do they often spend on hotels, and what parts of Malaysia do they most often visit when stay in hotels, could significantly enhance quality of the research project. Environmentally friendly, is part of a green hotel issue as well. Future researcher should take this issue into consideration when performing their research project.

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APPENDIX A SURVEY SAMPLE PAGE 2

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