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What Hotels Need to Know About ESG

This article explores where hotels should start on their ESG journey and what steps they can take to meet their goals.
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There’s been an increasing call for visibility in ESG efforts and practices across many sectors. For example, many countries and corporations alike are setting net-zero goals to reduce emissions to net zero by 2050. The hospitality industry is no exception. In a consumer-facing industry, understanding what customers value is a critical part to attracting clientele, and more and more consumers are caring about the ESG efforts of the brands they support. Seventy-eight percent of U.S. consumers say that a sustainable lifestyle is important to them, according to a study by NielsenIQ.

With pressure to claim and meet certain sustainability standards, some companies might be tempted to make themselves look a little bit better in this area than they actually are. Or despite genuine motives, not realize how to measure and report sustainability efforts. Making a claim that deceives customers as to a company’s actual environmental impact is greenwashing, which is a rampant problem that not only damages our planet but can be detrimental to one’s reputation if found out.

But where do hotels start on their ESG journey? And what steps can they take to meet their goals?  

What you need to understand:

  • Energy: When it comes to operating sustainably, hotels need to look at their energy consumption and the ways they can be more efficient. Ways to conserve energy include swapping in LED efficient bulbs, occupancy sensors, and communicating with both staff and guests that they should be mindful of energy usage. Small acts like using natural light or remembering to turn off the lights when you leave the room can contribute to a much larger mission.
  • Ecosystem: A hotel must take into account its impact on the existing ecosystem, and how its presence will influence the nature in the area. On the reverse, hotels and resorts also need to take into account how the natural environment will impact them and evaluate potential risk factors. For example, if a hotel is located near the beach, elements like rising sea levels need to be considered for hotel safety. ESG practices need to reflect an understanding and a concern for the ecosystem in the hotel’s location.
  • Community: A hotel becomes a part of its location’s community, whether it be in a big city or a small town. From bringing tourists to the area and stimulating the economy to employing locals, the activities of the hotel have a direct impact on its community. It’s important to understand the nuances of the area, like what the local people care about. Doing so can empower the hotel to operate as an asset and ally in its geographic location, instead of as a negative disruptor. It’s also essential to know and understand any historical or cultural influences in the community, what holidays attract visitors or are of most significance? While many people hear ESG and just think about sustainability or the environment, you must remember the S stands for social, ergo the social impact the hotel has.

What you need to do:

Deciding what you want your ESG goals to be can get confusing. A great place to start is to look at the competition. What are other hotels claiming to be their goals? Hilton has put out an ESG policy statement and Hyatt Hotels Corporation releases ESG responsibility reports. Especially in a consumer-facing industry, it’s important to know what everyone else is doing to see where you’ll measure up.

Overall, ESG needs to start at the top of any organization for it to take hold and be an intrinsic part of any business’ culture. Prioritization of ESG efforts, as well as an understanding of goals and actions to meet those goals, must start at the C-Suite and be carried down throughout hotel systems and processes. Whether it’s a huge chain hotel with locations across the country or a boutique family-owned hotel, all members of the team must be aligned on ESG initiatives in order to be properly effective and hold everyone accountable.

Tackling the project of identifying ESG goals, and then making sure you’re keeping up with them can be a daunting task. ESG materiality assessments can be helpful in ensuring you’re compliant with any regulations and frameworks, as well as holding the hotel accountable for what they say they’re doing in terms of ESG efforts. These assessments ensure reporting is credible which combats any risk of greenwashing. Some important ones to note are the International Sustainability Standards Board (ISSB) which develops standards for the hospitality industry, with subsegments on different sectors and defines what topics, at minimum, a company is required to report. The World Travel and Tourism Council (WTTC) is another great resource as it represents the travel and tourism sector globally and conducts research into all ESG aspects of the industry.

Effective ESG

We've seen ESG initiatives adopted by larger hotel chains, and looking ahead, one should anticipate it will trickle down into smaller hotels as well. Hotels need to prioritize all-encompassing strategies for impactful ESG, not just allowing visitors to opt in to reusing towels and sheets. ESG is so much more than saving some extra water each year—it’s the impact of a hotel on a great scale, in a community, and on the planet, which is why defining, measuring, and reporting ESG efforts is so important.

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