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Hospitality & Tourism Management 1st semester 2010

The pilot project


Delivery date: 20.01.2011

Supervisor: Maria Zarechnova

Written by: Elina Bormane Nora Horvath Simona-Andreea Luca Niklavs Svede

Aalborg 2011 1

Table of contents
1. Introduction .page 3 1.2 e3 1.3 Green Key ..page 4 1.4 Hanza Hotel ..page 5 2. Problem statement page 6 3. Methodology page 7 4. Situation .page 8 4.1 Analysis of environmental issues in hotel industry..page 8 4.2 Analysis of environmental issues in Latvia.page 10 4.3 Market segmentation in green quality programmes.page 13 4.4 Market segmentation in Hanza Hotel. page 17 5. Analysis .page 19 5.1 Comparison of Hanza Hotel and Axos Hotel preferences in different market 2 Green quality programs..pag

segmentation ...page 19 5.2 The affect of the Green Key in service management system . .page 21 6. Evaluation page 26 6.1 Advantages of going green in market segmentation.. page 26 6.2 Disadvantages of going green in market segmentation.page 27 7. Conclusion ..page 28 8. List of references .page 29 9. Attached files

1. Introduction
1.2 Green quality programmes

For years, the goals of business and environment seemed hopelessly irreconcilable.
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The clear reason of environmental pollution is the incredible rate of technological progress that human beings produced.2 The negative impacts of development can gradually destroy the environmental resources3 such as water and air, forests, soil etc.4 However nowadays businesses and environment are no longer enemies. Several green quality programmes can be found to solve the environmental pollution issued by businesses. enterprise and the environment.
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Applying a green quality

programme to a business can cause a win-win situation: both for the An eco-business might lead to an economic benefit, energy- and cost-savings.7 The result of applying a green quality programme is that businesses save the environmental resources. The writer of Earth in the balance Al Gore believes that win-win situation works with appropriate equipments because: The result in many cases is a process that not only pollutes less but lowers costs or improves quality.
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http://archone.tamu.edu/epsru/Course_Readings/Readings_09/Its%20Not%20Easy %20Being%20Green_Walley_Whitehead.pdf , page1 [Accessed 13 Jan] 2 http://www.kamaszpanasz.hu/hirek/zoldovezet/61/kornyezetszennyezes [Accessed 15 Jan] 3 http://www.geointeractive.co.uk/environmental%20impact%20of%20tourism.ppt, slide2 [Accessed 15 Jan] 4 http://www.geointeractive.co.uk/environmental%20impact%20of%20tourism.ppt, slide4 [Accessed 15 Jan] 5 http://archone.tamu.edu/epsru/Course_Readings/Readings_09/Its%20Not%20Easy %20Being%20Green_Walley_Whitehead.pdf, page2 [Accessed 13 Jan] 6 http://archone.tamu.edu/epsru/Course_Readings/Readings_09/Its%20Not%20Easy %20Being%20Green_Walley_Whitehead.pdf , page1 [Accessed 13 Jan] 7 http://www.isotanusitas.hu/kornyezet.html [Accessed 15 Jan] 8 http://archone.tamu.edu/epsru/Course_Readings/Readings_09/Its%20Not%20Easy %20Being%20Green_Walley_Whitehead.pdf, page3 [Accessed 13 Jan]
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On the other hand it is not easy to be green - the price for being ecological is high.
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It takes relatively long time; and it is also said that businesses will never get a financial return. The reason why environmental costs are increasing is inflation and economic growth.10 There are advantages and disadvantages using these programmes; this is going to be expanded later in the project. 1.3 Green Key Tourism as one of the fastest growing industries is a major energy consumer and the negative effects of tourism on the environment are becoming greater every day. Therefore, to encourage directors and owners of tourism accommodations to reduce their environmental impact, the Green Key programme was created. Today the Green Key is an ecolabel for environmental management in leisure organizations.11 Green Key is a programme of Foundation of Environmental Education.12 The purpose of the programme is to develop an eco-label for environmental issues.13 The programme started in 1994 in Denmark (in 1998 France joined and started labelling camping sites) and it is supported by consumer groups, NGOs, authorities, and business associations.
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The Green Key is an eco-label for hospitality facilities that aims to contribute to prevention of climate change and sustainable tourism by awarding and promoting good initiatives. The Green Key aims to change the practices and behaviors of hospitality actors including enterprises,
http://archone.tamu.edu/epsru/Course_Readings/Readings_09/Its%20Not%20Easy %20Being%20Green_Walley_Whitehead.pdf, page1 [Accessed 13 Jan] 10 http://archone.tamu.edu/epsru/Course_Readings/Readings_09/Its%20Not%20Easy %20Being%20Green_Walley_Whitehead.pdf, page1&page4 [Accessed 13 Jan] 11 http://www.kmvk.nl/cmslib/www.kmvk.nl/greenkeyorg/files/Factsheet_Green_Key_v1.pdf , page1 [Accessed 13 Jan] 12 http://www.green-key.org/ [Accessed 13 Jan] 13 http://www.kmvk.nl/greenkey/criteria.lp, page 2 [Accessed 13 Jan] 14 http://ec.europa.eu/environment/emas/pdf/StepUp/EMASGuidelines_BIO_FinalSummaryB rochure_GreenKey.pdf, page1 [Accessed 13 Jan]
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authorities, guests, local communities, and to involve them in increasing their responsibility towards their own environment. 15 A tourism enterprise can get awarded with the Green Key if it fulfills the following international criteria set: environmental management staff involvement guest information water waste and energy savings washing and cleaning food and beverages indoor environment parks and parking areas green activities and administration
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1.4 Hanza Hotel Hanza is a three-star family-run hotel.18 It is located in the center of Latvias capital, Riga, a short distance from Riga Old Town.19 It is open all year around and has a 24-hour front desk.20 Hanza Hotel is offering rooms for a wide target group:21 different facilities and services are being offered throughout the year such as restaurant, bar, newspapers, room service, laundry, car rental, rooms for disabled guests, meeting/banquet facilities etc.22
15 16 17 18 19 20 21 22

http://www.holland.com/meetings/uk/green-meetings/green-key/ [Accessed 13 Jan ] http://www.green-key.org/ [Accessed 13 Jan] http://www.kmvk.nl/greenkey/criteria.lp, page 3 [Accessed 13 Jan] http://www.hanzahotel.lv/en/rooms [Accessed 17 Jan] http://www.hanzahotel.lv/en/hotel_in_riga [Accessed 17 Jan] http://www.hanzahotel.lv/en/hotel_in_riga [Accessed 17 Jan] http://www.hanzahotel.lv/en/hotel_in_riga [Accessed 17 Jan] http://www.hanzahotel.lv/en/hotel_in_riga [Accessed 17 Jan]

2. Problem statement
Hanza Hotel is running its business successful. In order to keep the good position it wants to improve, to grow bigger. To perfect oneself the tourism enterprise has to adjust, to keep up with the trends and remain competitive in hospitality industry. This will promote prominent modifications and challenges such as: maintain the clients who are active smokers, those who choose fast food over ecological meals, in general- customers who are not concerned about environmental issues. After executing the green changes customer participation and willingness to be a part of environmental friendly activities is necessary. When going green it may attract a new target group- people who approve of green lifestyle. It means that the company has to be aware of changes in market segmentation.

The Problem Question How to apply environmental-friendly programme as a part of improvement initiative to Hanza Hotel without a great change in market segmentation? A great change is when Hanza Hotel looses the loyal customers and has a completely new target group. The aim is to maintain the existent customers and to attract new target group.

3. Methodology
We are going to form a relevant solution to our problem question by applying SWOT analysis, PEST analysis, by analyzing qualitative data, evaluating and describing. We are going to turn our research into useful data. The electronical interview with Hanza Hotels duty manager is going to be one of the main sources used in the project. There is lack of proper information on their homepage related to our problem question. There is enough information available about our chosen topic on the internet and in books, which we are going to use as sources.

4. Situation
In this chapter the general situation in environmental issues in hotel industry particularly in Latvia is going to be described and analyzed to have an overall review. This will help to answer and solve the problem question. 4.1 Analysis of environmental issues in hotel industry Hotels are a wasteful business and need to do much to reduce their impact on the environment23 Although individually hotels do not have a significant and obvious negative impact on the environment, together they can be very wasteful and consume huge amount of resources. It has been estimated that 75% of hotels environmental impacts can be directly related to unreasonable consumption. This is wasteful in terms of resources and it creates unnecessary operational costs. The three key areas of environmental impact are energy, water and waste.
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First of all, hotels are huge water consumers. An average tourist who is spending his time in a hotel consumes about 1/3 times more water per twenty-four hours than a local inhabitant.25 The whole tourism industry itself abundantly consumes water resources in hotels, their swimming pools and for tourist personal needs. These factors can also cause a lack of water supply and water degradation, as well as increase the amount of
http://www.economicallysound.com/resource_conservation/ [Accessed 17 Jan] http://green.hotelscombined.com/GreenYourHotelWhitePaper.php#environmentalimpact-of-hotels, slide 1 [Accessed 18 Jan] 25 http://vide.lu.lv/coastlearncd/tourism/why_problems.htm, [Accessed 18 Jan]
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waste water, which for many years has polluted tourist attracted locations near seas and lakes, damaging the fauna and flora. This waste water pollution can endanger people and animal health.26 Water is the liquid of life, and our society has to save it. Operating 24 hours a day, seven days a week, hotels in general use a lot more energy per visitor than local residents as they provide various amenities and services. It means using energy intense facilities such as bars, restaurants, banquet facilities, lounges, offices and pools, and spacious guest rooms.27 The third key area of environmental impact in hotel industry is solid waste generation, which is one of the most visible effects on the environment. It is believed, that approximately 30 percent of waste in hotels can be diverted through reuse and recycling.28 Trend toward recycling is growing and likely to grow in the future. Many in the hospitality industry who have not previously been affected by the issue of waste-disposal and the cost of soiled waste removing and other related problems will find that their situations have changed. They will eventually find it necessary to adopt a recycling programme.29 Of course, there are other issues in hotel industry that has effect on environment. For instance, one of the problems for certain part of hotels is the indoor air quality. In some of the lodging facilities it is allowed to smoke in its premises. Bad indoor air quality can cause allergies, asthmatic reactions and other undesirable diseases.30Increasingly, voters and travelers are clamoring for clean air.

http://vide.lu.lv/coastlearncd/tourism/why_problems.htm [Accessed 18 Jan] http://green.hotelscombined.com/GreenYourHotelWhitePaper.php#environmentalimpact-of-hotels, slide 1 [Accessed 19 Jan] 28 http://green.hotelscombined.com/GreenYourHotelWhitePaper.php#environmentalimpact-of-hotels, slide 1 [Accessed 19 Jan] 29 Dittmer R. P., Griffin, G. G., 1993, Dimensions of the Hospitality Industry, Van Nostrand reinhold, New York, pp. 528-529 [Accessed 19 Jan] 30 http://ergo.human.cornell.edu/HotelEzra/HIAQ.pdf, slide 8, [Accessed 19 Jan]
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Interesting to mention, that animals like foxes, mice are getting in to the recycle bins, where waste food is thrown. As a result feral animals are better fed than native animals, and it means losing culture and wrecking the environment at the same time.

4.2 Analysis of environmental issues in Latvia The hotel industry forms a large and significant part of the whole tourism industry and if not managed properly, it has the potential to be disadvantageous to the social and natural environments within which it functions. Hotels, as written before, are also resource intensive and in order to reduce their impact, it is imperative to go green. All in all, many greening initiatives are not expensive to implement and provide substantial benefits to the business. Taking steps towards going green is worthwhile for both consumers and businesses.31 To analyse what and how external factors affect the implementation of environmental-friendly programme to the hotel, a PEST analysis can be used. Organisation itself can not influence environmental factors, and environmental factors can not influence industries or organisations profitability. The first element of PEST analysis is political factors. It is related with the pressure and opportunities, which are offered by changes in government and society attitude against industry, changes in political institutions, and

31

http://green.hotelscombined.com/GreenYourHotelWhitePaper.php [Accessed 19 Jan]

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direction of political process, juridical questions and general legislative environment.32 The second element of involves economic factors. Economic conditions affect how easy or how difficult it is to be successful and profitable at any time because they affect both capital availability and cost, and demand.33 The third aspect focuses its attention on forces within society such as family, friends, colleagues, neighbors and the media. Social forces affect our attitudes, interests and opinions (like ethical). These forces shape who we are as people, the way we behave and ultimately what we purchase.34 Finally, unsurprisingly the fourth element is technology. Is related with changes in technologies which can modify the competitiveness positions of enterprise. Industries merge; new strategic groups arise; current products are being improved, un process innovations cuts manufacturing costs.35 In making a good PEST analysis scheme, subject should be a clear definition of the market being addressed.36

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http://rokasgramata.lv/frontpage/index/section_id/79 [Accessed 17 Jan] http://www.coursework4you.co.uk/essays-and-dissertations/pest-analysis.php [Accessed

17 Jan] http://www.learnmarketing.net/pestanalysis.htm [Accessed 18 Jan] http://rokasgramata.lv/frontpage/index/section_id/79 [Accessed 17 Jan] 36 http://vide.lu.lv/coastlearncd/tourism/why_problems.htm [Accessed 18 Jan]
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4.2.1 PEST analysis PEST analyzing model Political factors What political factors affect the situation? Social factors What social factors affect the situation? Ekonomical factors What economical factors affect the situation? Technological factors What technological development factors affects the situation?

PEST analysis about possibilities of successfully implementing an environmentalfriendly programme/going green to a hotel in connection with changes in the market segmentation.

Political factors What political factors affect implementation of environmentalfriendly programme? Rising/decreasing taxes in tourism and hotel business Government have a very positive and supportive attitude towards hotel industry Hotel must match up with all hotel law standarts/norms

Economical factors What social factors affect implementation of environmentalfriendly programme and profit gain? Competition Unstable economical situation Unnecessary much money resources spent on maintenance (energy, water etc.) Inflation rates under/not under control Growth of the economical industry Technological factors What technological development factors affect implementation of environmental-friendly programme? New inventions, that allows to save more water/energy Improved technologies, upgrades Communication through Internet

Social factors What social factors affect implementation of environmentalfriendly programme? Changes in people lifestyle, habits Consumers becoming health consciousness Going green is fashionable, people becoming fashion deliberate Changes in hotel industry fashion trends People awareness of environmental issues Hotels image from consumers point of view

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4.3 Market segmentation in green quality programmes


The market segmentation of green quality programs can be divided into groups: 4.3.1 Behavioral Green Segment

This group of people thinks and acts green. Their intention is to protect and improve the environment by using environmental-friendly products. They are trying to adopt healthy habits such as eating organic food.37 Over the years the number of Behavioral Greens- consumers with the most environmental-friendly based attitudes and behaviors- has increased by 7.3-million. In 2008, the number of these green consumers consisted of 62.4-million adults who represented 29% of the total adult population.38 4.3.2 Green Consumers The International Institute for Sustainable Development (IISD) describes green consumers as follows:

Commitment to green lifestyles

Critical of their own environmental practices and impact Looking for companies that incorporate green practices
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http://www.experian.com/small-business/think-green-consumers.jsp [Accessed 19 Jan] http://www.fusbp.com/pdf/BeGreenBeAwareBeGreenAware.pdf [Accessed 19 Jan]

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Overstate their green behavior Want environmental protection to be easy Tend to distrust companies environmental claims

Lack knowledge about environmental issues, but eager to learn

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The IISD offers some broad generalizations regarding the demographic characteristics of green consumers:

The majority of the green consumers are composed from young adults who are influenced by their young children

The best green customers are those with money to spend (good prospects for businesses at the high end of the market)

The key target market is formed from women because usually they make purchases on behalf men

The less green consumers are born before 195040

4.3.3 Think Green Segment

This group of people thinks green, but they do not behave as a green person. Over the past three years, the number of Think Greens has increased by more than 4 million41.

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http://www.uwex.edu/ces/cced/downtowns/ltb/lets/LTB1106.pdf, page 2 [Accessed 19 Jan] http://www.uwex.edu/ces/cced/downtowns/ltb/lets/LTB1106.pdf, page1 [Accessed 19 Jan] 41 http://www.experian.com/small-business/think-green-consumers.jsp [Accessed 19 Jan]
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This segment tries to remain active and eat healthy. Their children are grown-ups; therefore they have more time to pursue their interests. Home is important to them; they like to spend time decorating and remodeling the house.42 Think Green consumers believe that environmental protection is the responsibility of every person; the practical value of eco-friendly products should be assigned; our everyday actions can affect the environment and the environmental-friendly products are more expensive.5 Segment Snapshot

Established and midlife adults

College graduate or higher degree High income Typically married Likely to own their homes

Liberal or conservative

4.3.4 Potential Green Segment

This group neither behaves nor thinks about environmental issues and remains on the fence about key green issues. 4.3.5 True Brown Segment They are not environmentally conscious and may have negative attitudes about products and companies that promote themselves as safe for the environment.

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http://www.experian.com/small-business/think-green-consumers.jsp [Accessed 19 Jan]

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While its the smallest of the four segments, there is a downward trend indicating consumers in this group are evolving into one of the other three green segments as environmental consciousness grows.43 True Brown may be a target group for marketers. Nowadays those who manage to get in touch with True Browns are more likely to build longterm relationships with these consumers. Therefore if True Browns migrate to greener segments, marketers would enjoy enhanced brand loyalty and support.6 This green segment represents the smallest segment of consumers. They are ambitious, self-confident and status-driven adults who value selfdiscovery and individualism. True Browns make decisions quickly. The entertainment industry plays an important role in their lives. Segment Snapshot Mainly young, established adults Education ranges from high school through postgraduate studies High income Typically single or married Likely to own their homes Conservative
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http://www.targetmarketingmag.com/article/riches-niches-connecting-true-browns403940/1, [Accessed 19 Jan] 44 http://www.experian.com/small-business/true-browns.jsp [Accessed 19 Jan]


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4.4 Market segmentation in Hanza Hotel


Hanza Hotel is trying to attract both individuals and groups.45 It is suitable for business travelers and people who travel on leisure purposes.46 Opening Hanza Hotels homepage, the pictures make the first impression about the tourism enterprise. They reflect peaceful and relaxing, elegant and modest environment. 4.4.1 Families As the hotel is a family-run business, it aspires to maintain the ambience of one. It is eligible for a family stay because of the vast availability of twin rooms and a free public parking place nearby. It is important for a family because families enjoy traveling by a car, spending quality-time together.47 A car rental service is accessible at the front desk if a car is needed.48 4.4.2 Students

By choosing to stay at Hanza Hotel a student may save money for the public or private transportation because the hotel is located close to the Old city, where the main tourism objects and entertainment places are to be found.49 Low season is the most eligible time for this target group: it is possible to stay at the hotel for affordable price.50 For instance if two students want to stay at Hanza Hotel for a weekend in February (18.02.2011-21.02.2011), it would cost them 87 Euros for a double room.51
From the interview [Accessed 16 Jan] From the interview [Accessed 16 Jan] 47 http://www.independenttraveler.com/resources/article.cfm?AID=334&category=2 [Accessed 16 Jan] 48 http://www.hanzahotel.lv/en [Accessed 16 Jan] 49 http://www.hanzahotel.lv/en [Accessed 16 Jan] 50 http://www.smartertravel.com/travel-advice/season-cost-Five-tips.html?id=11416 [Accessed 16 Jan] 51 http://www.booking.com/hotel/lv/hanza.html? sid=a3c32f7059ec860b2de313464fcb00b5;origin=disamb;srhash=727265574;srpos=2 [Accessed 17 Jan]
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4.4.3 Business travelers

Hanza Hotel offers availability for a wide number of rooms, free wireless internet and a conference room of 55 m2 with all the equipment needed and professional personnels assistance.52 It is suitable for individual business travelers and for groups.

[] business people are frequent customers as well due to excellent location and the service quality offered
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4.4.4 People who are interested in history

The hotel is located in a historical place: in past it was a place where merchants used to cross roads, sell goods and after a long day traders accustomed to stay and rest.54

4.4.5 Overnight travelers

Travelers, who are staying at the hotel overnight and going further with their traveling in early morning, may find Hanza Hotel fitting to their
http://www.hanzahotel.lv/en [Accessed 17 Jan] From the interview [Accessed 16 Jan] 54 http://www.hanzahotel.lv/en [Accessed 17 Jan]
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needs: it is possible to arrange to have a take- away breakfast, front desk is working 24 hours55 and guests always appreciate the responsiveness and willingness to help from behalf of receptionist.56

4.4.6 People who are devoted to refined sensuous enjoyment

The hotel possesses its own restaurant which offers food and drinks from all of Riga's former partners in Hanseatic League along the coast. Customers who are interested in this, those who are gourmets may also follow the head- cooks notes online57 related to the restaurant Hanza Pub. Restaurant focuses on fresh fruit vegetables and green salads all bought in the nearby Central Market are our guarantee of healthy food served through the day from breakfast till night.
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5. Analysis
In this chapter a comparison of Hanza Hotel and Axos Hotel will be presented. Both of them are rated as 3 star hotels, but there is a difference: Axos Hotel has been awarded as a green hotel, Hanza Hotel has been not. The purpose of comparison is to show the distinction and the impact of the change in market segmentation after going green. In sub-chapter 5.2 it is assumed that Hanza Hotel applied a green quality programme. Possible changes in service management system related to the problem question are being taken into consideration.

5.1 Comparison of Hanza Hotel and Axos Hotel preferences in different market segmentation
55 56 57 58

http://www.hanzahotel.lv/en [Accessed 17 Jan] From the interview [Accessed 16 Jan] http://dienaspiedavajums.blogspot.com/ [Accessed 17 Jan] http://www.hanzahotel.lv/en/restaurant [Accessed 18 Jan]

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Axos is a three-star hotel in Greece. It is located in the most well-known seaside village Platanias; close to a sandy beach and a historical town.59 Axos Hotel has been awarded as a fully-green hotel.60 While maintaining a high level of comfort and services for the guests, Axos Hotel continues to offer extra care for the environment and nature in everyday activities:

changing all lights in the rooms with energy saving light bulbs (it

uses less electricity than standard bulbs to do the same job)


putting a special bin for the used batteries in the reception area

replacing all the batteries with recharged ones for all the remote controls of the rooms

friendly use to the environment detergents

using a special jacket for the hot water tank in order to save at list 20% energy

using a special mechanisms on balcony doors and windows to save

electric energy from the air-conditions

putting in all the rooms recycle bags for paper, plastic and aluminium

helping the guests to find healthy and green activities during their

stay at the hotel61

The main market segment of Axos Hotel is environmental-friendly customers.62 Compared to Hanza Hotel the target group is differently oriented. In both cases there are dissimilar needs and preferences: Axos
http://www.axos-hotel.gr/ [Accessed 18 Jan] http://www.axos-hotel.gr/info.php?catid=2 [Accessed 19 Jan] 61 http://www.axos-hotel.gr/info.php?catid=2 [Accessed 19 Jan] 62 Abraham Pizam, 2005, International encyclopedia of hospitality management, page [Accessed 19 Jan]
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Hotel mostly attracts families and couples due to its apartments and studios which can hold up 3 to 4 people.63 This customer segment spends much discretionary income on comfort, pleasure, time-savers, eating out and entertainment, their health, their homes, and staying young
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This specific target group considers environmental practices when choosing a holiday or business destination, a hotel, and an airline company. They pay attention to the raw materials they want to know the origin of it, under what kind of conditions it is grown and its impact on the environment once it lands to the trash bin.
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The target group in Hanza Hotel is wider. The company is offering rooms for families, students, business travelers, people who are interested in history, overnight travelers and people who are devoted to refined sensuous enjoyment. Hanza Hotel tries to cater every costumer individually. At one point of view it is easier to handle them than the green customers because of the lack of special needs and expectations. These customers need a personalized and enjoyable stay at a particular hotel.66 In order to give them that Hanza needs to take some facts into consideration such as lifecycle passage and the stage of development. On the other hand Hanza Hotel is trying to attract green customers as well. The hotel has already applied some undistinguished green initiatives.67 This segment might be small at the moment, but there are signs that it is growing.

http://www.axos-hotel.gr/ [Accessed 19 Jan] http://www.strategicmarketsegmentation.com/hotel-market-segmentation/ [Accessed 19 Jan] 65 Abraham Pizam, 2005, International encyclopedia of hospitality management, page [Accessed 19 Jan] 66 http://www.performancesalessystems.com/Why-Hotels-Need-Effective-CustomerRelationship-Management-CRM-Implementations.html [Accessed 19 Jan] 67 Questionnaire [Accessed 16 Jan]
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One response by hotel operators and tourist destinations to the growth of the green consumer has been the developing of environmental awards and badges, which allow hotel operators and tourist destinations to promote their environmental credentials
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5.2The affect of the service management system after implementing a green quality programme in Hanza Hotel When applying any improvement initiative, the company has to be aware of the prospective changes in service management system and actual product of outcome69. In this case- when a hotel is planning to go green by implementing a green quality programme in order to improve and not to lose their existing clientele, but also attract a new target group. All the parts of service management system have to be considered carefully. 5.2.1The Service concept A customer has his expectations; he knows what he wants, when he books a room at a regular hotel70. The basic hotels function is accommodation71, but the hotel industry has grown72 and to keep up with the times, when competition is fierce and customers expectations are increasing, making renovations is necessary in order to succeed73.

Abraham Pizam, 2005, International encyclopedia of hospitality management, page 207 [Accessed 19 Jan] 69 Fitzsimmons, A. J., Fitzsimmons, M. J., 2004, Service Management operations, strategy, information technology, fourth edition, McGraw-Hill/Irwin, New York, page 68 [Accessed 19 Jan] 70 Bowe, T. J., Kothler, F.,Makens, C. J., 2006, Marketing for Hospitality and Tourism, fourth edition, Pearson education International, New Jersey, page 391-393 [Accessed 19 Jan] 71 Vallen, G. K.,Vallen J. J.,2009, Check-in, Check-out: Managing Hotel Operations, eight edition, New jersey, page 4 [Accessed 19 Jan] 72 Walker, R. J., 1999, Introduction to Hospitality, second edition, Prentice Hall, New Jerseypage, page 78-79 [Accessed 19 Jan] 73 http://www.bizjournals.com/twincities/stories/2002/03/18/focus1.html [Accessed 19 Jan]
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The basic product of Hanza Hotel is a room with breakfast included in the service package, which is the tangible part. Intangible service is the availability to contact the front desk 24 hours74. The change in a service concept would be- the new service package also includes customers participation and awareness of using a product. The new product likewise consists of environmental friendly policy applied to the hotel. The problem would appear, if a customer does not want to take a part75 in environmental-friendly activities, which are the main component of improvement initiatives. 5.2.2 Market segmentation If the hotel is changing to an environmental-friendly tourism enterprise, it has to satisfy the needs of existing customers and also has to be ready for new, in green lifestyle interested target group. After making green changes, customers willingness and competence to participate76 is relevant to maintain the green way of thinking. Customers also may need to learn new skills.77 Existing loyal customers could be divided in two groups: 1) Customers, who are willing to participate
2) Customers, who do not care about the environmental-friendly

innovations and are not willing to be a part of them

www.hanzahotel.lv[Accessed 19 Jan] Fitzsimmons, A. J., Fitzsimmons, M. J., 2004, Service Management operations, strategy, information technology, fourth edition, McGraw-Hill/Irwin, New York, page 106 [Accessed 19 Jan] 76 Fitzsimmons, A. J., Fitzsimmons, M. J., 2004, Service Management operations, strategy, information technology, fourth edition, McGraw-Hill/Irwin, New York , page 106 [Accessed 19 Jan] 77 , Fitzsimmons, A. J., Fitzsimmons, M. J., 2004, Service Management operations, strategy, information technology, fourth edition, McGraw-Hill/Irwin, New York, page 71 [Accessed 19 Jan]
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The first group does not cause any queries about following the new green policy. The second one has to be taken into account. Customer resistance to new forms of service transactions may be explained by the need to learn a radically new script78 If not making any solutions or compromises, these loyal customers may be lost effortlessly. A positive aspect in market segmentation after going green is the brand new target group- environmental-friendly lifestyle supportive people. Market segmentation could change if there would be some modifications in prices. Possible changes in prices for the room should be considered. Responding to environmental challenges has always been a costly and complicated proposition79 to the company. 5.2.3 Service Delivery system While going green the hotel should pay attention how the green innovations are linking together with existing operations. The balance between the core service and new green activities has to be maintained. Without doubt there will be new technologies implemented in the hotel. Personnel as well as customers need to have a good knowledge80 about practicing green initiatives. The employees have to be educated in order to satisfy the guest and deliver services consistently to customers. The new services need to meet strategic intensions (to economize on power/water saving, stay competitive, make a good image etc.) to retain a good quality.

Fitzsimmons, A. J., Fitzsimmons, M. J., 2004, Service Management operations, strategy, information technology, fourth edition, McGraw-Hill/Irwin, New York, page 106 [Accessed 19 Jan] 79 http://archone.tamu.edu/epsru/Course_Readings/Readings_09/Its%20Not%20Easy %20Being%20Green_Walley_Whitehead.pdf, page 46 [Accessed 19 Jan] 80 Fitzsimmons, A. J., Fitzsimmons, M. J., 2004, Service Management operations, strategy, information technology, fourth edition, McGraw-Hill/Irwin, New York, page 71 [Accessed 19 Jan]
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5.2.4 Culture and philosophy When introducing Hanza Hotel to green initiatives, it is relevant that the employees are competent, educated about the new philosophy that company follows. They have to be well informed about the green changes, have to know the expected result and why these changes are being made. The key word in the definition of perception is individual.81 Individual approach is relevant when reaching out to the customer. A group of customers who do not want to be a part of green innovations should be considered as a challenge. Employees should know how to react when facing this group. They are the ones, who make the communication with clients. That is why the staff members should be well prepared and enlightened in the new green culture. Also the green activities should be proposed within the personnel, because employees make the first impression about after entering the hotel. 5.2.5 The Image The image of the green hotel should not be disregarded. Environmentalfriendly image may be a useful tool for conserving the existing loyal clients, likewise for attracting new customers. It is expedient to illustrate the change in philosophy of going green and to underpin it with reasonable arguments. The focus of the image would change. When booking a room by using internet, a customer would see what kind of company Hanza Hotel is. Implemented green programme would display the hotels new view of hospitality business. The image may be used as an important instrument of communication with existing and potential clients.

Bowe, T. J., Kothler, F.,Makens, C. J., 2006, Marketing for Hospitality and Tourism, fourth edition, Pearson education International, New Jersey, page 213 [Accessed 18 Jan]
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5.2.6 SWOT analysis applied to Hanza Hotel INTERNAL FACTORS Strengths Weaknesses Excellent location Lack of marketing expertise High quality of services (trained employees) Differentiated services, for example, take-away breakfast Individual approach to specific requests Green initiatives Own restaurant Ecological products for the use of making healthy food Reputation is not formed yet Rated as a 3 star hotel, although the hotel is close to have 4 stars (may lead to a wrong impression about the hotel)

EXTERNAL FACTORS Opportunities Expanding the market segmentation by attracting environmental friendly oriented customers Gaining a certificate for practicing green initiatives to be the premier green hotel in the district
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Threats Lack of local people as customers (competitors may use this as their opportunity to extend their market segmentation)
Unstable economical situation

in country, increase of taxes82 Fierce competition

http://www.internationaltaxreview.com/Article/2613640/IMF-forces-Latvia-to-increaseVAT-rate.html [Accessed 19 Jan]

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6. Evaluation In this chapter advantages and disadvantages are being evaluated. If Hanza Hotel is willing to go green, there has to be more advantages than disadvantages in order to benefit from the change in market segmentation. 6.1 Advantages of going green in the market segmentation The concept of going green- becoming more environmentally aware and then putting that awareness into practice
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- has been frequently

practiced in hospitality and tourism businesses nowadays. The first advantage of going green for a business besides protecting the environment is the amount of money that can be saved in a long term. According to Microsoft, turning off your machine every night, or putting it into "hibernate" mode so that the screen uses no energy, can save $90 per computer over the course of a year
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One approach that can be applied in the process of saving more energy is using new devices, which seem to be more economical. Therefore, it is possible to reduce the overall cost and the amount of bills. After few months it is feasible to save money and protect the environment by practicing green initiatives.

http://www.ehow.com/facts_5032914_advantages-disadvantages-corporations-goinggreen.html [Accessed 20 Jan] 84 http://www.ehow.com/facts_5032914_advantages-disadvantages-corporations-goinggreen.html [Accessed 20 Jan]


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Another advantage is to gain independence for a business by producing its own energy. It may maintain a good image and lower the costs for both the enterprise and a customer in a long run. One more benefit of going green is paying fewer taxes. It may affect the price of the room in a positive way. The hotel would spend less money on taxes, so the customer would get the room for a more affordable price. In this case the price would not be the crucial factor influencing a great change in market segmentation. The 2009 federal stimulus bill contained approximately $50 billion in funding to promote clean energy. Among the incentives are tax deductions for businesses that can cut their building's energy consumption by 50 percent 6.2
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Disadvantages of going green in market segmentation

To begin with, it is expensive for a hotel to turn into an environmentalfriendly enterprise. It is not common yet, although there is a tendency which shows growth in practicing environmental-friendly initiatives.86 The companies which are providing the implementation of green practices are still in a process of development. It is a long progression to gain the appropriate level of knowledge. To even up the losses a possibility of increasing the price for staying at a hotel could be established. Otherwise the customer may choose a lower cost accommodation. In order to be ecological a particular enterprises employees and customers need to gain knowledge how to use the green quality programme in practice. It takes time to enact intended activities.

http://www.ehow.com/facts_5032914_advantages-disadvantages-corporations-goinggreen.html [Accessed 21 Jan] 86 http://www.hotel-online.com/News/PR2007_3rd/July07_OrlandoGreen.html [Accessed 21 Jan]


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Going green may not fit to some of the loyal customers expectations. It is complex for them to participate in the process of green lifestyle. They may be indolent to recycle, to smoke outside, to save energy etc. Unwillingness to be involved in specific activities may cause a great change in market segmentation.

7. Conclusion
In order not to loose the existing clients of Hanza Hotel, the following facts should be taken into consideration: The hotel should cater for every customer individually because they need a personalized and enjoyable stay at the particular accommodation. If Hanza Hotel applies a green quality programme as a part of improvement initiative it should try to keep the costumers willingness and competence to participate. The tourism enterprise should think of keeping more or less the same prices in order to avoid a great change in market segmentation. It is trendy to be green nowadays. Therefore the change is positive in the image and has an impact of keeping the loyal customers. In order to attract the green market segmentation Hanza Hotel should have an extra care for environment and nature in every-day activities. While doing it they should again cater for every client individually. To expand the hotels target group it should provide the appropriate conditions for special needs which has been described in details under the chapter Market segmentation in green quality programmes. To get green clients the employees should be well-prepared in green culture. The change in the image has to be taken into consideration in this case as well it attracts the prospective target group.

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8. List of references
Articles: 1.http://www.archone.tamu.edu/epsru/Course_Readings/Readings_09/Its %20Not%20Easy%20Being%20Green_Walley_Whitehead.pdf - Harward Business review, May-June1994. Its not Easy to be Green, pg. 1-4.[online] 2. http://www.bizjournals.com/twincities/stories/2002/03/18/focus1.html Andrew Tellijohn, 17 March 2002, 11:00 pm. Hotel competition drives renovation [online] 3.http://www.ehow.com/facts_5032914_advantages-disadvantagescorporations-going-green.html - an eHow Contributor, 2011. Advantages & Disadvantages of CorporationsGoing Green. [online] 4. http://www.entrepreneur.com/marketing/networking/article53188.html Misner, I., 2002. Word-of-Mouth: The Worlds Best-Known Marketing Secrets. [online] 5.www.entrepreneur.com/marketing/networking/article53188.html - Misner, I., 2002. Word-of-Mouth: The Worlds Best-Known Marketing Secrets. [online] 6.http://www.experian.com/small-business/think-green-consumers.jsp Experian Information Solutions, 2011. Think Green Consumers Mailing List [online] 7.http://www.experian.com/small-business/true-browns.jsp - Experian Information Solutions, 2011. True Browns Mailing List [online] 8. http://www.independenttraveler.com/resources/article.cfm? AID=334&category=2 - Genevieve S. Brow, 2011. Family Car Travel [online] 31

9. http://www.internationaltaxreview.com/Article/2613640/IMF-forces-Latviato-increase-VAT-rate.html - Euromoney Institutional Investor PLC, 15 December 2008. IMF forces Latvia to increase VAT rate. [online] 10. http://www.fusbp.com/pdf/BeGreenBeAwareBeGreenAware.pdf - Experian, 2007. Be Green, Be Aware, Be GreenAware [online] 11. http://www.performancesalessystems.com/Why-Hotels-NeedEffective-Customer-Relationship-Management-CRMImplementations.html - A Sales and Marketing Effectiveness and Custom Development Company, 2010.Why Hotels Need Effective Customer Relationship Management (CRM) Implementations [online] 12. http://www.targetmarketingmag.com/article/riches-niches-connectingtrue-browns-403940/1 - Denise Hopkins, 4 March 2009. Riches in Niches: Connecting to True Browns [online] 13. http://www.targetmarketingmag.com/article/riches-niches-connectingtrue-browns-403940/1 - Bill Ryan, November 2006. Lets talk business [online]

Books:
1. Bowe, T. J., Kothler, F.,Makens, C. J., 2006, Marketing for Hospitality and

Tourism, fourth edition, Pearson education International, New Jersey


2. Dittmer R. P., Griffin, G. G., 1993, Dimensions of the Hospitality Industry,

Van Nostrand reinhold, New York


3. Fitzsimmons, A. J., Fitzsimmons, M. J., 2004, Service Management

operations, strategy, information technology, fourth edition, McGrawHill/Irwin, New York 4. Hollensen, S., 2003, Marketing Management A relationship Approach, Pearson Education Limited, Essex
5. Vallen, G. K.,Vallen J. J.,2009, Check-in, Check-out: Managing Hotel

Operations, eight edition, New jersey


6. Walker, R. J., 1999, Introduction to Hospitality, second edition, Prentice

Hall, New Jersey 32

Brochures:

1. Summary brochure from green Key to EMAS , 2009. [online]. Available at:

<http://ec.europa.eu/environment/emas/pdf/StepUp/EMASGuidelines_BIO_Fin alSummaryBrochure_GreenKey.pdf> [Accessed 10 January 2011]


2. The green Key- AN ECO-LABEL FOR LEISURE ORGANIZATIONS, 2009.

[online]. Available at: <http://www.kmvk.nl/cmslib/www.kmvk.nl/greenkeyorg/files/Factsheet_Gree n_Key_v1.pdf> [Accessed 10 January 2011]

Internet sources:
1.

Axos Hotel, Friendly to the Environment. [online]. Available at:

<http://www.axos-hotel.gr/info.php?catid=2> [Accessed 19 January 2011]


2.

Axos Hotel, Welcome to Axos Hotel in Rethymno - Crete. [online].

Available at: < http://www.axos-hotel.gr/> [Accessed 19 January 2011]


3.

Baranovskis Normunds, 2011, Hanza Pub Special offer. [online].

Available at: <http://dienaspiedavajums.blogspot.com/> [Accessed 19 January 2011]


4.

Developement Portal, 2008, Is it worth to be green? [online].

Available at: <http://www.isotanusitas.hu/kornyezet.html >[Accessed 15 January 2011]


5.

Economically Sound, 2011, Rescource conservation. [online].

Available at: <//www.economicallysound.com/resource_conservation/> [Accessed 17 January 2011]


6.

GeoInteractive Geography Resources,2011, ENVIRONMENTAL

IMPACTS OF TOURISM, slide 2, 4. [online]. Available at:<http://www.geointeractive.co.uk/environmental%20impact%20of %20tourism.ppt> [Accessed 15 January 2011]

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7.

Green Hotels & responsible Tourism Initiative, 2010, How to increase

your bottom line by going green? [online]. Available at: < http://green.hotelscombined.com/GreenYourHotelWhitePaper.php#environ mental-impact-of-> [Accessed 15 January 2011]
8.

Green Hotels & responsible Tourism Initiative, 2010, Environmental

impact of hotels. [online]. Available at: <http://green.hotelscombined.com/GreenYourHotelWhitePaper.php#envir onmental-impact-of-hotels> [Accessed 15 January 2011]
9.

Hanza Hotel, Hanza Hotels homepage. [online]. Available at:

http://www.hanzahotel.lv/en [Accessed 19 January 2011 ]


10.

Hanza Hotel, Restaurant / Hanza Hotel in Riga. [online]. Available at:

<http://www.hanzahotel.lv/en/restaurant > [Accessed 18 January 2011]


11.

Holland, Green Key. [online]. Available at:

<http://www.holland.com/meetings/uk/green-meetings/green-key/> [Accessed 13 January 2011]


12.

Hotel Market Segmentation, Hotel Market Segmentation & Hotel

Customer Segments. [online]. Available at: <http://www.strategicmarketsegmentation.com/hotel-marketsegmentation/ > [Accessed 19 January 2011]
13.

Kamasz Pamasz, 2009, The consequences of environmental

pollution. [online]. Available at: <http://www.kamaszpanasz.hu/hirek/zoldovezet/61/kornyezetszennyezes> [Accessed 15 January 2011]


14.

News for the hospitality executive, 2007, Going Green - the Number

1 Trend in the Hotel Industry. [online] . Available: <http://www.hotelonline.com/News/PR2007_3rd/July07_OrlandoGreen.html> [Accessed 17 January 2011 ]
15.

Online booking, 2011, Hanza Hotel. [online]. Available at:

<http://www.booking.com/hotel/lv/hanza.html?

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sid=a3c32f7059ec860b2de313464fcb00b5;origin=disamb;srhash=727265 574;srpos=2 > [Accessed 17 January 2011]


16.

Sustainable Tourism, 2011, Non- sustainable seaside tourism

problems. [online]. Available at: http://vide.lu.lv/coastlearncd/tourism/why_problems.htm [Accessed 18 January 2011]


17.

The Green Key, 2009, AN ECO-LABEL FOR LEISURE ORGANIZATIONS, Available at: <http://www.kmvk.nl/cmslib/www.kmvk.nl/greenkeyorg/files/Factshe et_Green_Key_v1.pdf> [Accessed 10 January 2011]

18.

The Green Key, The Green Key homepage.[online]. Available at:

<http://www.green-key.org/ >[Accessed 13 January 2011]

Additional sources:

1. Personal interview Name of the person interviewed: Elina Stepanova Interviewed by: Elina Bormane, Nora Horvath, Simona-Andreea Luca, Niklavs Svede Date and time: 17 January 2011, electronically
Name of the person interviewed: Elina Stepanova Interviewed by: Elina Bormane, Nora Horvath, Simona-Andreea Luca, Niklavs Svede Date and time: 17 January 2011, electronically

9. Attachments
Interview 1. How is the business going (in general)? 35

In general the business is going well- there is a tendency of number of guests increasing.

2. What is the average booking per day?

To answer this, many aspects have to be taken in consideration: On weekends- the hotel usually is more booked than in the beginning of week or even booked 100 % The situation is changing rapidly- the expected number of guests may vary (increase/decrease, it depends on many factors) Holiday season Unexpected weather conditions etc.

3. What are Hanza Hotels the target groups?

Target groups: individual travelers, groups of tourists and business travelers. Most of the guests are people from abroad, Latvians as guests commonly never reach more than 1-5 % of total number of customers during the month. Mostly our customers travel on leisure purposes, although business people are frequent customers as well due to the excellent location and the service quality offered. 36

From October- April our customers are more individual and business travelers, nonetheless during May- September the number of groupleisure travelers increases noticeably (usually every day there is at least one group (sometimes even 3 or 4 groups at once) of leisure travelers staying at the hotel).

4. Does the hotel offer any kind of loyalty programme, discounts or any other bonuses?

The hotel comes forward with exclusive price offers and individualized, special services to its loyal customers. Occasionally there are special offers being made to new customers, such as stay 3 nights, pay for 2 etc.

5. Does the service package include all elements the customer expects? Have these elements met the standard and quality criteria? We are trying to meet all the expectations of our guests within limits. We are implementing all the standard criteria of quality in a high level, which is why we do not position ourselves as a 3 star hotel, but as a 3+ star hotel. In order to gain the 4th star we just need to establish few additions that are requirements for this rate. 6. How will you cater for the customers particular needs and expectations?

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First of all, we are trying to do everything it takes to make our customer feel good and comfortable. Guests always appreciate the responsiveness and willingness to help from behalf of receptionists. The rooms invariably are in a perfect order and clean. Breakfast is solid and the choice offered is wide (starters, main course), everyone is welcomed to try delicious dishes and drinks at Hanza Pub within the business lunch and a la carte. We are taking a good care of business guests basic and specific needs. The service is fast, of a high quality and responsibility. If a guest has an extra demand, we try to meet it. We are also making the monitoring of our guests by using questionnaires, as well as appraising guest left references online, which is a good opportunity to see what we need to sharpen up.

7. How is the whole service management system- culture (internal environment), image (marketing), concept and delivery system (technologies used, for example, for booking)? The number of employees is comparatively small; therefore the process of organizing, communication and delivery is fast. Hanza Hotel cuts a fine figure. Albeit the hotel was opened in 2007, maintenance and renewal operations are made constantly. The volume and quality of services are being improved on a regular basis. Every one of employees fulfills its duties conscientious with a high level of responsibility. Staff members are amiable, cooperative, friendly and always willing to help.

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About the registration of guests- when they arrive, they are asked to fill out the registration papers in order to save the information. Check- in and check- out proceeds very quickly, it takes just few minutes. The guest is given the entire necessary information- city map, tips, directions, information about the most beautiful and remarkable tourism objects nearby etc.

8. Have you applied anything green (non-smoking, power/water saving, food etc.)?

We are putting into effect the green initiatives: Power saving- for instance, if there is no one in a room for employees, the light has to be turned off, likewise economical light- bulbs are used
Waste paper is given for Lgatnes Paprfabrika

for recycling

We are encouraging our guests to think and act green, for instance taking in consideration water and power saving during their stay
Due to the safety policy it is not allowed to smoke inside the

building, but guests are allowed to smoke outside. 2 times a year fire prevention measures are taking place at the hotel, so the employees are prepared for emergencies. First aid classes are planned to be held in the nearest future
The groceries are bought from tested and reliable distributors,

focusing on ecological food

The only working company of paper industry in Latvia. One of its operations is to recycle waste paper

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