A friend posted an article on actions a local hotel took to become more environmentally friendly. The hotel has increased recycling and started composting food waste. The article also mentioned that the actions implemented either saved cost or were cost neutral. What struck me most was that the actions were taken only after loosing convention business to another city. I applied our learning on risk and utility to understand why it took threat of loosing business to take on cost saving actions.
The tradeoff the hotel faced reminded me of the discussions we had involving risk and also the article “Valuing Billions of Dollars”. The decline of natural resources and the environment is considered to be uncertain, indirect, non-economic, and a future cost. Each of these types of costs are typically discounted compared to the money lost by loosing a customer to a competitor. In this case the lost business had an enormous perceived value resulting from Atlanta’s position as a leading convention hub. Conventions are big business to Atlanta, in 2006 convention attendees spent an estimated $2.4 billion dollars.
Link to BUS650: Risk, utility, and tradeoffs were made by the Hyatt to retain convention business.
Resource links
- Article: http://www.facebook.com/ext/share.php?sid=74967942439&h=L5jGI&u=JOrcV&ref=nf
- Metro Atlanta Business-Convention Visitor Profile http://www.atlanta.net/ACVB/annualReports.html
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