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####### Damaí Lovina Villas: Can Eco-standards and Certification Create... 1
Damaí Lovina Villas: Can Eco-standards
and Certification Create Competitive
Advantage for a Luxury Resort?
Nicole Darnall, Arizona State University
Mark B. Milstein, Cornell University
Copyright © 2014 by the Case Research Journal and by Nicole Darnall and Mark B. Milstein. Earlier versions of this case and Instructor’s Manual were awarded, the Case Association’s Best First Case, in addi- tion to the oikos Sustainability Case Writing Competition’s Honorable Mention.
G
lenn Knape, general manager of Damaí Lovina Villas, wandered the small
luxury hotel’s grounds looking out over the property’s rice paddy fields located
on the island of Bali, Indonesia. His gaze was drawn to the property’s gardens
full of organic produce destined for the resort’s restaurant. He turned to see the hotel’s
outdoor spa, which was surrounded by waterfalls that captured and reclaimed fertile
topsoil for use by neighboring farms. In the four years since his arrival in 2002, Knape
had strived to make Damaí more sustainable by building on his experience as food
service manager at the 2000 Sydney Olympics. The experience had taught him how
to promote high quality service delivery and enhance operational efficiency through
waste reduction. In applying that knowledge to Damaí, Knape introduced signifi-
cant changes that had made the resort more efficient than many of its competitors.
Additionally, many of his innovative initiatives—from sourcing food to preventing
erosion—were benefitting employees and the local community in ways he had not
anticipated.
Now, in 2006, Knape wondered whether his efforts to address a host of social and
environmental issues could be leveraged to brand Damaí as a “green” hotel to improve
its competitiveness. Toward that end, Knape considered whether participating in a
voluntary environmental program (VEP) would help Damaí gain external recogni-
tion for the hotel’s sustainability efforts and improve revenues. These programs used
standards and certification to improve business’ environmental performance, and had
become increasingly popular in Europe, Asia, the United States (U.), and his own
native Australia. But Knape wondered whether Damaí’s existing sustainability prac-
tices would need to be expanded significantly to qualify the hotel for membership in
those programs. He also questioned whether the programs were worth the investment,
and if they would persuade additional guests to stay at the hotel. Moreover, if he chose
to participate in a VEP, he had questions about which one (or which combination)
might offer Damaí the greatest benefits.
NA
####### 2 Case Research Journal • Volume 34 • Issue 3 • Summer 2014
DAMAÍ LOVINA VILLAS AND RESTAURANT
Damaí Lovina Villas and Restaurant was situated 3 kilometers from Lovina Beach
on the northern part of Bali, Indonesia (see Exhibit 1) among spice plantations, tropi-
cal jungles, and terraced mountainsides. Secluded on a hillside, views from the hotel
stretched from the former Balinese capital, Singaraja, in the east to the volcanoes on
the neighboring island of Java in the west. A panorama of jungle and hills lay to the
south, and to the north was the hotel’s eternity pool that seemed to spill into the ocean
below. The hotel’s motto was “hard to find, hard to leave.” The property consisted of
eight romantic villas with fifty-seven hotel staff to pamper its guests.
Upon check in, guests were treated to welcome drinks, a ten-minute massage, spar-
kling wine, fresh exotic fruit, and a bouquet of tropical flowers. Villas were furnished
with four-post beds, handcrafted furniture, and a sunken lounge with a floor-level din-
ing table (see Exhibit 2). Hand woven local textiles hung on guest room walls. Freshly
cut flowers from the grounds were placed in the rooms daily. Bathrooms featured pri-
vate outdoor showers in a garden setting, whirlpools, and massage tables for in-room
spa treatments. Guests also had the option of receiving spa treatments at two private
outdoor “bales” with views of rice paddies and waterfalls.
Damaí’s open-air dining room and restaurant was one of the hotel’s foremost fea-
tures. Fodor’s wrote that the restaurant was “not to be missed under any circumstances.” 1
Similarly, Rough Guide claimed the restaurant was “the most exquisite gourmet din-
ing experience in northern Bali, if not the entire island.” 2 Daily menus were created
based on available spices and seasonal organic produce from local markets and the
hotel’s own private gardens. Dinner typically consisted of five set courses. Meals were
designed with a creative flair and a strong focus on presentation. That attention to
detail kept most hotel guests dining at the hotel rather than venturing into one of
Lovina Beach’s many cafes and bistros. The hotel offered spa treatments that were
exclusive to hotel guests. It also arranged daily excursions for guests to snorkel, dive,
golf, and shop, in addition to programs for guests to learn Balinese cooking, yoga,
meditation, and Tai Chi.
Damaí’s target guest was the urban professional. Guests came from all parts of
the world, however most traveled from Western Europe and the U. Many visitors
were honeymooners or couples celebrating other special occasions. With eight villas,
Damaí’s maximum occupancy was sixteen guests, and about 39 percent were repeat
visitors. Most guests booked their stays using either an Internet search engine (e.,
Expedia, Hotels) or the hotel website.
Room sales accounted for approximately 40 percent of Damaí’s total revenues
(see Exhibit 3, which summarizes Damaí’s revenues and costs). The restaurant’s food
and beverage sales accounted for approximately 43 percent of the hotel’s revenues.
While guests from other hotels sometimes dined at Damaí’s restaurant, restaurant rev-
enues from outside guests were negligible (< 2 percent). Spa treatments accounted for
approximately 7 percent of total revenues and excursions and other hotel programs
accounted for the remaining 10 percent. Damaí’s average annual costs of operations
were approximately 40 percent of total revenues.
The hotel’s strong operating margins were bolstered by Bali’s low cost of labor and
Damaí’s compensation structure. A good paying wage for a waiter was about $350 per
month, and this wage could sustain a family of four with no additional income. Gar-
deners and cleaning staff were paid less. Knape’s salary was less than Western standards
####### 4 Case Research Journal • Volume 34 • Issue 3 • Summer 2014
Knape determined that the most widely known programs were: Best Green Hotels,
Eco Lodge, Green Globe 21, Green Hotel Initiative, and ISO 14001 (see Exhibits
5–9). While each of these VEPs shared the common goal of using environmental
standards to identify and promote environmentally superior hotels, Knape noticed
that there was significant variation among their sustainability requirements. VEPs
also offered varying levels of credibility for their sustainability approach, in that most
VEPs required hotels to self-report their adherence to program guidelines while others
required third-party certification of participants, which enhanced the legitimacy of
member hotels’ environmental claims. For example, participation in the Best Green
Hotels program (Exhibit 5) required that participating hotels evaluate their envi-
ronmental performance across twenty-nine “green” attributes, whereas participants
in CERES’ Green Hotel Initiative completed a longer “Best Practice Survey.” Best
Green Hotels (Exhibit 5), Eco Lodge (Exhibit 6), and CERES’ Green Hotel Initiative
(Exhibit 8), all asked member hotels to self-assess their environmental performance.
By contrast, Green Globe 21 (Exhibit 7) and ISO 14001 (Exhibit 9) relied on inde-
pendent third parties to verify members’ environmental practices.
Knape also observed that there was significant variation in VEP costs. For instance,
participating in Best Green Hotels and CERES’ Green Hotel Initiative was free. The
Eco Lodge Program charged a percentage of bookings through its website. Green
Globe 21 had a graduated fee system that began at $220 per year, whereas ISO 14001
certification cost between $270–$1,370 USD per employee, 5 depending on the extent
to which the business had instituted pollution prevention and product stewardship
procedures prior to implementing the environmental management system (EMS). 6
The gold standard in the hotel industry was the certified eco-hotels located in Costa
Rica, a country which had gained an international reputation for sustainability. Costa
Rica had more than 75,000 acres of natural parks, and 87 percent of tourists reported
that these parks were the most important place to visit in the country. 7 Many lodges
and hotels in Costa Rica had participated in a third-party certified VEP called Certifi-
cation for Sustainable Tourism. Any hotel within the country could have participated
in the VEP, however, hotels that demonstrated highest verifiable levels of superior
environmental performance had built reputations as sustainability havens, and eco-
minded tourists were paying price premiums of $30 above other hotels to stay in
them. 8 However, travelers to Costa Rica might have differed significantly compared to
travelers to other countries.
In considering the prospect of Damaí receiving premium prices associated with
VEP participation, Knape wondered whether Bali could command a price premium
similar to Costa Rican hotels or whether Damaí’s patrons were like most other travel-
ers, who were unwilling to pay a price premium. Bali lacked the nature preserves that
had drawn so many eco-minded tourists to Costa Rica in the first place. Additionally,
Knape perceived that non-luxury eco-hotels appealed to budget-minded travelers in a
way that a luxury hotel might not. Perhaps a segment of the market would have been
likely to seek out a visit to a luxury eco-hotel, but would the individuals comprising
this segment be willing to pay a premium to stay at Damaí? Would VEP membership
influence their decision for selecting a hotel?
Knape thought VEPs might be a way to establish Damaí as a green brand to over-
come consumer skepticism. But given the variations in VEP requirements, he decided
to conduct an internal audit of the hotel’s sustainability practices to better under-
stand how VEPs might work for Damaí. Coincidentally, about that time, a friend
####### Damaí Lovina Villas: Can Eco-standards and Certification Create... 5
and sustainability consultant persuaded Knape to implement his internal audit with
the assistance of a broader sustainability framework (see Exhibit 10). Applying the
framework would involve assigning each of Damaí’s individual activities into one of
four sustainability categories—cost/risk reduction, reputation/legitimacy, innovation/
reposition, and vision/opportunity framing. The consultant explained to Knape that
companies which tended to emphasize cost/risk reduction and/or reputation/legitimacy
were in a good position to address present day environmental concerns related to exist-
ing services. However, these companies still could be vulnerable to unanticipated shifts
in the operating environment, consumer preferences, etc. On the other hand, hotels
which placed greater emphasis on innovation/repositioning and vision/opportunity
framing tended to have stronger sustainability visions but lacked the foundational
capabilities or analytical skills necessary to implement that vision. The consultant fur-
ther explained that hotels focused internally were more concerned with activities they
could control, which could lead to myopia and a lack of consideration for critical
external constituencies. On the other hand, hotels that fixated externally were more
concerned with stakeholder concerns and external opinions, and could fail to nurture
their internal capabilities. These hotels, Knape surmised, were especially vulnerable to
external claims of “greenwashing.”
Knape saw that the framework would also help him think about the activities
the hotel did (or could do). By utilizing the framework, Knape hoped to determine
whether Damaí’s sustainability activities were balanced both in terms of their focus on
short- and long-term goals, and the degree to which these goals engaged internal or
external stakeholders. Finally, the framework would encourage Knape to consider the
organizational value of the hotel’s sustainability activities, and what skills or capabili-
ties would be associated with each category.
Knape was keen to apply the portfolio framework to determine how Damaí’s vari-
ous activities linked to value creation. He also believed that the results of the portfolio
analysis would offer a basis upon which to compare Damaí’s sustainability program to
the activities required by the various VEPs, to determine what additional activities the
hotel would need in order to qualify for VEP participation.
DAMAÍ’S SUSTAINABILITY PROGRAM
Knape began inventorying Damaí’s sustainability activities in three areas: organic and
locally-sourced services, operational efficiency, and employees/community.
Organic and Locally-Sourced Services
By 2006, Damaí was growing approximately 80 percent of its organic produce in the
gardens surrounding the hotel. What Damaí could not grow onsite was purchased
from local farmers who also utilized organic farming principles.
Knape made a concerted effort to purchase the restaurant’s supply from local farm-
ers rather than farmers in South Bali or the neighboring Indonesian islands. Wines
and cheeses were examples of two exceptions to the restaurant’s “buy local” policy.
Bali had only two wineries—Hatten Wines and the organic Bali Fruit Drink. The
restaurant stocked wines from both producers, but neither were of premium quality.
There also were no cheese makers on Bali. As such, Knape imported wines and cheeses
from Australia. The hotel had not established an organic purchasing policy for these
imported food items.
####### Damaí Lovina Villas: Can Eco-standards and Certification Create... 7
to iodized water. The new system converted non-iodized salt into pure chlorine. Once
the chlorine oxidized dead bacteria and algae, it was recycled back into salt—ready to
be converted to chlorine again. While the system was not chemical free, it was a closed
loop process and eliminated stabilizers and calcium byproducts that were associated
with conventional chlorine systems.
Damaí utilized a water recycling system that directed “gray water” from sinks and
showers to on-site tanks. This wastewater was filtered through a series of tanks contain-
ing volcanic rock, porous rubber, and sand. Treated water was tested once a month by
government officials who communicated to Knape that Damaí’s water rating was the
best in North Bali. Treated water was used in agricultural production. Even waste from
the toilets, or “black water,” was collected and treated using natural enzymes to break
down the organic waste. Black water was then passed through a series of filters and
re-used in the hotel’s fields. In aggregate, Damaí’s water conservation efforts reduced
hotel water use by 75 percent.
Permaculture was used to lower water consumption in hotel gardens and to increase
healthy crops. It created a closed loop system by which Damaí’s farmers collected
leaves and other natural garden waste and distributed them among the crops. Like
mulch, the natural waste reduced water evaporation. The permaculture also prevented
weed growth and eventually become compost that nourished the fields. To further
sustain its garden, Damaí’s farmers allowed a portion of their crops to go to seed. In
other instances, plants were grafted. The result of these efforts was high quality, high
yield fruit and vegetable production, which had reduced Damaí’s crop production
costs by 90 percent.
In early 2006, Knape was in the process of installing a solar energy system with
storage capacity. The first step in this conversion had begun in November 2005 when
Damaí converted its hot water systems to solar power-based heating. A new solar
electric system was anticipated to further reduce the hotel’s electric costs. As the hotel
moved all its electrical systems toward solar power, Knape anticipated that surplus
electricity would be sold to the state operated electricity authority, and yield a return
on investment within three months.
The hotel’s eight villas were not constructed with green design principles. The
rooms, for example, lacked vents for natural air flow. As a consequence, guests had to
rely exclusively on air conditioning for temperature control. Looking ahead, Knape
hoped to renovate the villas so that they utilized natural thatching and venting to keep
the rooms cool. Although the hotel’s owner was reluctant to undertake the renova-
tions, a new investor might change this, and some discussions regarding a new investor
were underway.
Knape did not promote Damaí’s sustainability focus in its guest rooms, restaurant,
and gardens and did not seek to involve guests in activities such as optional linen reuse
programs that had gained popularity in the U. and European hotel industry. These
efforts seemed to him unbefitting of Damaí’s luxury status.
Employees/Community
Knape provided transportation, telephone service, and two meals per shift to Damaí
employees. The hotel employed a doctor to address the health concerns of both the
staff and their families. To accommodate the religious needs of its workers and their
families, the hotel offered transportation for monthly visits to the region’s largest
####### 8 Case Research Journal • Volume 34 • Issue 3 • Summer 2014
temple. Private temples constructed on the hotel’s grounds and communal temples in
nearby villages met religious needs at other times.
Additionally, Knape had instituted a preferred purchasing policy with its hotel staff.
Staff relatives made employee uniforms and guest room curtains. The hotel gave pref-
erence to hiring the staff’s family when booking musical performances and traditional
dances. Damaí did not have an official incentive program that encouraged continual
improvement of the hotel’s environmental and community practices, however depart-
ments that operated most efficiently were recognized with bonuses.
Related to the broader community, conventional farming practices in nearby vil-
lages had involved farmers burning their agricultural waste at the end of the growing
season to generate ash that fertilized the land. However, burning impaired air qual-
ity and human health—an issue compounded by the hundreds of small farms that
operated locally. Poor air quality also had a negative impact on tourism. In response,
Damaí partnered with local farmers to teach them about composting their leftover
plant material, and utilizing microorganisms to increase the pace of decomposition,
thereby eliminating the need for burning.
Knape had also sought to address some of the environmental problems facing
the fishing industry. Fish farms were common in North Bali and one of the biggest
concerns was limiting the growth of blue/green algae. High algae growth produced
harmful toxins, emitted strong sulfurous odors, and depleted dissolved oxygen in
water causing fish to die. Conventional fishing methods typically relied on harmful
chemicals to control algae development. These methods also limited Damaí’s access to
organically farmed fish. By encouraging fishermen to use microorganisms to temper
blue/green algae growth and forego the need for harmful chemicals, fish farms were
able protect their revenue streams while at the same time increase their availability of
organically farmed fish.
Damaí was also working with local farmers and village leaders to reclaim eroded
topsoil. Bali’s terraced landscapes, coupled with monsoon rains, caused fertile topsoil
to flow from the rice paddies and drain into the ocean. The topsoil loss prompted more
farmers to rely on chemical fertilizers to grow their crops. As a means to address the
issue, Damaí built a series of large rock wall filters in the river that ran through the
hotel’s property. The filters created a series of waterfalls, the base of which captured
much of the topsoil lost from the seven villages surrounding the hotel. Damaí encour-
aged the local farms to reclaim their topsoil from the hotel pools to reduce the need
for chemical fertilizers. Damaí’s guests appreciated the waterfalls as a tranquil place to
relax and enjoy nature.
Finally, Damaí had partnered with the area leaders to help them develop a fire
preparedness strategy. Damaí was especially concerned about the lack of fire prepared-
ness procedures because fires were commonly used in agricultural practices, and were
one of the greatest threats to the community. Knape had collaborated with the fire
department to write detailed fire procedures to ensure the safety of local residents and
businesses.
NEXT STEPS
Moving forward, Knape faced three nested decisions to determine whether participat-
ing in a VEP could leverage Damaí’s sustainability efforts to achieve the company’s
competitive goals of increasing guest occupancy and its related revenues. First, having
####### 10 Case Research Journal • Volume 34 • Issue 3 • Summer 2014
####### Exhibit 1: Island of Bali and Damaí Lovina Villas
Damaí Lovina Villas
Source: retire-asia/qvbali.shtml, with permission, and adapted by the authors.
####### Damaí Lovina Villas: Can Eco-standards and Certification Create... 11
####### Exhibit 2: Damaí Lovina Villas and Restaurant
Damaí Lovina Restaurant and Bar Pool-side dining
In-room dining Organic restaurant cuisine
Guest bed, natural linens, and mosquito netting Garden bath, organic soaps, and natural whirlpool
Source: Hotel documents, with permission, and author photos.
####### Damaí Lovina Villas: Can Eco-standards and Certification Create... 13
####### Exhibit 4: Competitor Hotels*
HOTEL Characteristic Damaí Lovina Villas
Puri Bagus Lovina
Alila Matahari Beach Resort City Lovina Beach (2 mi)
Lovina Beach Ubud Pemutaran
Region North Bali North Bali Central Bali Northwest Bali Number of rooms 8 40 56 32 Room rates** • Superior $150 $183 $200–315 $225– • Deluxe $165 $256 $230–333 $355– Additional high season charges
- $25/room $30/room 10%
Breakfast included? ü ü ü ü Spa facilities? ü ü ü ü Organic focus? ü – – – Sustainability focus? ü – – – VEP participation? – – Green Globe Affiliate
- As of July 6, 2006. ** Rates were based on double occupancy, exclusive of 21% tax and service fees. All figures in USD.
Source: Hotel websites (damai, lovina.puribagus, alilahotels/ ubud, matahari-beach-resort, respectively) last accessed July 6, 2006.
####### 14 Case Research Journal • Volume 34 • Issue 3 • Summer 2014
####### Exhibit 5: Best Green Hotels
The Best Green Hotels website described its mission as providing participating lodging properties with the opportunity to demonstrate commitment to the environment and greening of the hospitality industry. By participating in the program, hotels identified themselves as being sustainable and provided specific information about what environmental action they have taken. Participating hotels were included in an online database that was searchable by location and other identifiers. Registration was free. Hotels used an online submission form to provide information about their environmental activities. Responses were then summed and ranked based on the number of “green” attributes they designate. Between one and six green triangles were assigned to participating hotels to indicate their level of “greenness.” A rating of six indicated that a hotel had all the green attributes deemed important by Best Green Hotels.
Participation Survey No: X Yes: ü Unknown:? Promised but not provided: # X ü? # X ü? # Towel program ¡ ¡ ¡ ¡ Fresh air ¡ ¡ ¡ ¡ Sheet program ¡ ¡ ¡ ¡ Allergies ¡ ¡ ¡ ¡ Cotton towels/sheets ¡ ¡ ¡ ¡ Non-smoking rooms ¡ ¡ ¡ ¡ Environmental cleaning ¡ ¡ ¡ ¡ Alternative energy ¡ ¡ ¡ ¡ Water conservation ¡ ¡ ¡ ¡ Maintenance for conservation ¡ ¡ ¡ ¡ Xeric garden ¡ ¡ ¡ ¡ Energy conservation ¡ ¡ ¡ ¡ Gray-water recycling ¡ ¡ ¡ ¡ Bulk soap and amenities ¡ ¡ ¡ ¡ Recyclable disposables ¡ ¡ ¡ ¡ Bonus ¡ ¡ ¡ ¡ Compostable disposables ¡ ¡ ¡ ¡ Newspaper program ¡ ¡ ¡ ¡ Durable service items ¡ ¡ ¡ ¡ Composting ¡ ¡ ¡ ¡ Guestroom recycling bins ¡ ¡ ¡ ¡ Organic food served ¡ ¡ ¡ ¡ Hotel recycling bins ¡ ¡ ¡ ¡ Eco-friendly food served ¡ ¡ ¡ ¡ Donations to charity ¡ ¡ ¡ ¡ Promote “greenness” in PR ¡ ¡ ¡ ¡ Conference center/rooms* ¡ ¡ ¡ ¡ Educate staff to “green” ¡ ¡ ¡ ¡ Transportation* ¡ ¡ ¡ ¡ Educate guests to “green” ¡ ¡ ¡ ¡ Fitness center* ¡ ¡ ¡ ¡ Participate in “green” program(s) ¡ ¡ ¡ ¡ Internet* ¡ ¡ ¡ ¡
- The non-green (business related) attributes are not included in the rating system.
Best Green Hotels Rating System
- 1 green triangle—▲ = 1–4 checks • 4 green triangles—▲▲▲▲ = 16–22 checks
- 2 green triangles—▲▲ = 5–9 checks • 5 green triangles—▲▲▲▲▲ = 23–28 checks
- 3 green triangles—▲▲▲ = 10–15 checks • 6 green triangles—▲▲▲▲▲▲ = 29 checks
Bali Participants 1. Risata Bali Resort and Spa, Tuban ......................................▲▲▲▲ 2. Bali Hilton International, Nusa Dua .............................................▲▲ 3. Udayana Eco Lodge, Denpasar ..................................................▲▲ 4. Melia Bali Villas and Spa Resort, Nusa Dua ...................................▲ 5. Melia Benoa, Tanjung ......................................................................▲ 6. Le Meridien Nirwana Golf and Spa Resort, Kedri ...........................▲
Source: bestgreenhotels, July 6, 2006.
####### 16 Case Research Journal • Volume 34 • Issue 3 • Summer 2014
####### Exhibit 7: Green Globe 21
The Green Globe 21 (GG21) website characterized this VEP as a global benchmarking, certification, and improvement program that encouraged sustainable travel and tourism. GG21 was developed using Agenda 21 and principles for sustainable development, which were endorsed by 182 Heads of State at the United Nations Rio de Janeiro Earth Sum- mit. Its website indicated that GG21’s goals were to provide companies, communities, and consumers with a path to sustainable travel and tourism. Participation in GG21 was open to businesses across the travel and tourism industry, including accommodations. According to GG21, its International Ecotourism Standard was designed to facilitate envi- ronmentally sustainable ecotourism by promoting a core set of principles that included: - Conservation and management - Design of environmentally sensitive products - Energy efficiency - Environmentally sensitive purchasing policies - Hazardous substances - Involving staff, customers, and communities in environmental issues - Land use planning and management - Management of fresh water resources - Noise control - Partnerships for sustainable development - Protection of air quality - Re-use and recycling - Transport - Waste minimization - Waste-water management GG21 provided participants a report indicating where the member hotel performance was positioned relative to environmental and social benchmarks. Each year advice was pro- vided as to whether a participant had improved or maintained its performance based on the original benchmarking assessment. The GG21 program involved three steps or levels—affiliation, benchmarking, and certifying— which had to be renewed annually to maintain status. Hotels were encouraged to work towards higher levels and track progress in achieving targets over time, thus committing to a process of continual improvement. Operations had to meet all of the requirements of the relevant level and undergo an independent audit in order to use the GG21 logo. According to GG21, certification to the International Ecotourism Standard helped to provide ecotour- ism businesses with: - A benchmark of their ecotourism performance that encourages continual improvement of their product. - Recognition and reward for best practice performance through the Standard. - A blueprint for ecotourism development. - A means of recognizing genuine ecotourism product for primary consumers—the visi- tors—and secondary consumers such as local communities, protected area managers, and tour wholesalers. - A means of protecting local and global environmental quality. - Encouragement to contribute to local communities and conservation. - Improved profitability by being less wasteful and more efficient.
####### Damaí Lovina Villas: Can Eco-standards and Certification Create... 17
####### Exhibit 7: continued
Participation fees were based on the hotel’s entry level into the program and the number of full time equivalent employees or the number of rooms (accommodation properties only) a hotel had. Hotels seeking Awareness (Affiliate) status paid $220 USD per site and 50 per- cent of the benchmarking and certification base costs. Benchmarking and certification base fees were a function of hotel size. Micro hotels with < 5 employees or < 10 rooms pay $ USD, small enterprises (< 50 employees or < 70 rooms) paid $695 USD. Large sites (> 50 employees or > 70 rooms) paid $1,610 USD. Benchmarking and certification fees did not include the cost of onsite independent assessment for GG21 Certification, which typically cost $2,000–$3000 (total) for large sized hotels.
Bali Participants
####### Level Requirements Participants
Affiliated Required gathering information about sustainable tourism practices and princi- ples and preparation of an Environmental and Social Sustainability Policy.
Alila Manggis
Alila Ubud
Amandari
Amankila
Bali Dynasty Resort
Conrad Bali Resort and Spa
Kayumanis Private Villas and Spa
Maya Ubud Resort and Spa
Nikko Bali Resort and Spa
Novotel Coralia Benoa Bali
Nusa Dua Beach Hotel and Spa
Sanur Paradise Plaza Hotel and Suites
Sofitel Seminyak Bali
The Bale
The Legian
The Ritz Carlton Bali Resort and Spa
The Westin Resort Nusa Dua
Uma Ubud
Waka Gangga Benchmarked Required an independent assessment of measurements against key indicators, the development of an Environmental and Social Sustainability Policy, and annual collection of measures in key environ- mental and social performance areas.
Discovery Kartika Plaza Hotel
The Oberoi
Certified Required implementation of an inte- grated Environmental Management System. The logo was only used/issued once the operation had been successfully benchmarked AND passed an indepen- dent on site assessment/audit.
- Bali Hilton International
- Melia Bali Villas and Spa Resort
- Meliá Benoa All-Inclusive Resort
- Meliá Purosani Hotel
- Udayana Lodge
Source: greenglobe21/, July 6, 2006.
####### Damaí Lovina Villas: Can Eco-standards and Certification Create... 19
####### Exhibit 9: ISO 14001
ISO 14001 was a certified standard for environmental management systems (EMS) that was developed in 1996 by the International Organization for Standardization (ISO). Any type of organization could adopt an ISO 14001 EMS. In addition to hotels, govern- ment offices, administrative companies, and manufacturing facilities could certify to ISO 14001. Because of this broad applicability, ISO 14001 had quickly become one of the most widely recognized environmental certification programs in the world. According to its website, more than 129,000 companies worldwide had certified to ISO 14001. A requirement for ISO 14001 certification was the adoption of an externally audited EMS, which involved the adoption of a formal management system that required companies to evaluate and manage the environmental aspects of their operations. Sustainability management systems broadened this objective by also considering the organization’s impacts on the community. Both management systems emphasized compliance with environmental regulations, involvement of external stakeholders in environmental activi- ties, and pollution prevention. To adopt ISO 14001, businesses were required to undertake six steps and commit to continuously lowering the environmental impact of their goods, products, and services: - Develop an environmental policy. - Assess environmental aspects and impacts. - Establish objectives and targets. - Develop an implementation strategy. - Monitor and correct for problems. - Undergo management review. While many companies had employed EMSs for years, ISO 14001 was the first inter- national standard certified by an independent third party auditor. According to ISO’s website, most companies that certified to ISO 14001 reported that obtaining registration was the main reason for their interest in ISO 14001, because for the first time they could market their environmental management processes as a means to reach environmentally conscious purchasers. Certification required that businesses hire independent external auditors to review and verify that their EMS conformed to the ISO 14001 standard. Adoption of an ISO 14001 EMS cost between $270 and $1,370 USD per employee, depending on the extent to which the company had already instituted proactive environmental and continual improvement procedures prior to implementing a formalized EMS and seeking external certification. 1
Bali Participants Because ISO did not have a central list of ISO 14001 certified companies, Knape was uncertain how many Bali hotels (if any) were ISO 14001 certified.
Source: iso/iso/en/iso9000-14000/index.html, July 6, 2006.
Note
- Darnall N., and Edwards Jr. D. 2006. “Predicting the Cost of Environmental Management System Adoption: The Role of Capabilities, Resources and Ownership Structure.” Strategic Management Journal 27(4), 301–320.
####### 20 Case Research Journal • Volume 34 • Issue 3 • Summer 2014
####### Exhibit 10: Sustainable Value Portfolio and Definitions
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Damai - Case Material
Course: Environmental Business Strategies (MGMT 3160)
University: 香港科技大學
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