Sunshine through my window
Working 8,544 miles away from my colleagues this past summer was certainly a novel experience. There were ups and there were downs. Confusion, delays, and frustration were balanced by fascinating work and the sense of creating value. Moreover, working on a project that incorporated several of my chief interests was extremely rewarding—namely, luxury hospitality, sustainability, and strategic business initiatives. My work on solar power systems for tropical resorts provided—as Gabrielle, the singer-songwriter from East London, sang—just a little “sunshine through my window” to make this difficult summer a valuable and memorable time.
A little background
This summer, I had the pleasure of working with an international luxury hotel company that is trying to increase the proportion of renewable energy it uses. In particular, I was responsible for making the “business case” for greater investment in solar power. This was possible due to the generous support provided by Johnson in the form of the Social Impact Internship Fund (SIIF).
To give a bit more context, the hotel brand is best described as “ultra-luxury” and the company originally launched by creating sustainable, “barefoot” style properties in remote locations of exceptional natural beauty. Most of their properties—which are scattered predominantly around Asia and Europe—feature stand-alone villas which can cost guests up to several thousand dollars a night. More impressively, the firm is at the leading edge of sustainable tourism, certainly on the luxury end of the hotel space. Every property contains an organic garden and an area in which guests can learn about how waste is minimized and recycled, among many dozens more sustainable features including a stringent sustainable food-sourcing list, efforts to go zero-plastic across the company, and treating and bottling water on site to avoid imported plastic water bottles.
While the hotel group is very good at minimizing waste, trying to create low-impact menus, and other operational sustainable practices, energy generation is an area they have wanted to work on. With most of their properties in far-flung locations, grid power is not always available. As a reliable alternative, properties have historically used diesel generators. There are several issues with the use of generators: the expense of diesel, the resultant air pollution, and the impact on the hotel’s brand in view of its eco-conscious guests.
The challenge of making a convincing argument
I was brought in for the summer to provide the general managers of each property with the analysis and arguments they could use to communicate convincingly to property owners that solar power makes good business sense. Hotels—particularly groups or chains—are not usually owned by the brand that is running them. The actually buildings and land frequently belong to an individual, a fund, a property development firm, or something similar. As such, any substantive changes to the property as well as any capital expenditures above a certain threshold must be approved by the property owner. There is inevitably some tension between the hotel operator and the hotel owner. The operator wants the highest quality equipment and regular maintenance in order to provide the best experience for guests. The owner wants to maximize their return on investment, which, at a very basic level, means minimizing costs and maximizing revenue.
My biggest challenge, therefore, was trying to convince a number of different individuals and organizations who are inherently cost-conscious and conservative when it comes to overhauling the way things have been done, potentially for decades. In addition, I needed to become better acquainted with solar power and energy markets from Bali, Indonesia to the Douro Valley, Portugal.
Execution – more than facts and figures
After plenty of research—including speaking with my very generous fellow MBA classmates who have experience in the energy and solar sectors—I started liaising with solar firms across the world who could install the systems. From there, I scrutinized their financial projections and made my own models. I then used these calculations as a part of my final deliverable: a document and deck that general managers could present to property owners. I treated the deck like a “presentation to convince” an audience. So rather than simply listing facts and figures, the presentation’s structure was designed to mollify any concerns the owners may have and also provide a comprehensive rationale that addresses more than the financial viability of solar power.
In addition to the financial models and projected figures owners would want to know (net present values and internal rates of return), I also included information about wider cultural and governmental pressure for firms to go green. I couched these pressures as risks that need to be mitigated. Thus, rather than presenting them as social or political opinions, they were liabilities to the business that could emerge as a burdensome tax, loss of income, or reduced brand luster.
Working [very] remotely
Working with an international firm based in Bangkok certainly came with its challenges. The 11-hour time difference meant that calls took place at 10 pm EST and that when I sent emails, they were generally received in the middle of the night in Thailand, so responses took at least 24 hours. I quickly got used to making the most of the few calls that we did have so that small niggling points were not forgotten or lost in a raft of emails or Skype messages. There was also the inherent isolation of working remotely, an ironically shared experience among many people this year. I missed getting to know my colleagues outside of just professional communications and speaking to people with whom I would not normally interact directly regarding work.
Overall, the internship was rewarding and taught me a great deal about the relations between property owners and operators, the energy industry, solar power, and creating a business case for sustainability.