I just took a trip to Portland and was reminded of the split incentive problem in rental housing.  Hotels face a split incentive too: once a guest has paid for the room, he has no incentive to conserve resources because the hotel foots the energy costs.

Now consider the way that hotels are dealing with the split incentives on energy use: they are appealing to our consciences. I have done a lot of traveling over the last few years, but I can’t remember a hotel that hasn’t included a card in the bathroom encouraging me to use the same towel over again if I am staying more than one night.

  • You know:

    Dear Guest:

    Our hotel is committed to conserving our country’s natural resources. Every day, tons of detergent and millions of gallons of water are used to launder towels that have only been used once.

    A towel on the floor : “Please exchange”

    A towel on the rack means: “I’ll use it again”

    I’d always thought this was just cost-cutting masquerading as corporate responsibility, but it may be both.  Some large chains like Marriott have saved a lot of energy and money. Marriott International claims to have saved 4,700,000 kWh of electricity and 136,000 therms of natural gas, which adds up to a savings of $672,000 in 2006 alone. Overall, the Marriott program says that it cut CO2 emissions by 2% per room for a total of nearly 4 million pounds (the emissions-equivalent of about 200,000 gallons of gasoline).

    Marriott accomplishes all of this by appealing to people’s increased awareness about climate change—in those little cards and elsewhere. In fact, there is even an industry-supported online search engine called “I Stay Green” focused on helping lodgers find hotels with environmentally sustainable practices.

    In the case of hotel towels the market is correcting a split incentives problem. The winner here is the hotel industry and arguably the environment.  But where are the monetary savings going?  Not to workers, evidently. The hotel industry—especially the Marriott Corporation—has been very unfriendly to workers’ efforts to organize their hotels to improve working conditions and wages.  And it’s unclear whether the savings are lowering prices, improving services for customers, or just padding profits.