Sustainability and ESG reporting in hotels

Corporate disclosure on ESG is becoming mandatory and standardized across jurisdictions, which will help to improve transparency around ESG disclosure. Just over half (51%) of respondents to one of GlobalData’s Q2 2023 ESG sentiment polls said that their company had an ESG plan in place, showing no significant change from the previous quarter. 17% of respondents could not say whether their company had an ESG strategy. A further 33% of respondents said their company had no ESG strategy.

People remain skeptical of companies’ motives behind ESG reporting

Many hotels across the globe, especially large, listed ones, have adopted voluntary ESG reporting standards. Among the most popular of these have been the Global Reporting Initiative (GRI), Task Force for Climate-Related Financial Disclosures (TCFD) recommendations, and Sustainability Accounting Standards Board (SASB) standards. These voluntary reporting standards are being made mandatory or are being replaced by mandatory reporting. This is being done to standardize data for investors, thereby helping capital to flow to hotels that perform well on ESG metrics, and other stakeholders. According to another of GlobalData’s Q2 ESG sentiment polls, 47% of respondents believe that most companies treat ESG as a marketing exercise. Governments are looking to address this issue, with regulation around greenwashing expected to increase across many jurisdictions.

Environmental sustainability in hotels is of high importance

Hotels are resource-intensive operations. Implementing energy-efficient technologies can lead to substantial savings. For instance, adopting LED lighting and smart HVAC systems can result in up to 30% reduction in energy consumption. Waste management strategies, including recycling and food waste reduction, can significantly lower a hotel’s environmental footprint. Water conservation practices, such as low-flow fixtures, have shown to reduce water usage by up to 30%. Hotels with environmental certifications like LEED or ISO 14001 tend to outperform non-certified competitors. A study by Cornell University found that LEED-certified hotels achieve higher daily rates and occupancy rates compared to their non-certified counterparts. This data underscores the financial benefits of investing in sustainability measures.

Hotels have a social responsibility and community impact

Investing in employee wellbeing and development pays off. Hotels that prioritize fair labor practices and provide opportunities for professional growth have lower turnover rates. This leads to reduced recruitment and training costs, ultimately benefiting the bottom line. Additionally, a diverse and inclusive work environment enhances creativity and innovation, which are vital for staying competitive in the industry. Legislation and government pressure are the leading reasons for creating an ESG performance plan, while consumer demands take a backseat. Policymakers in all major economic regions are upping the ante on regulation due to their net-zero pledges. Governments are developing anti-greenwashing legislation and introducing enhanced regulation around ESG accountability and performance tracking.

Ultimately, the integration of sustainability and ESG reporting is not just a moral imperative or a legal requirement, but a strategic move for hotels. ESG will be one of the most critical themes impacting hotels over the next decade. Governments are increasing pressure on corporations to meet ESG disclosure requirements as part of their plans to reach net zero. This includes tackling climate change, improving governance, and making companies more socially sustainable. Data shows that environmental measures lead to significant cost savings, while certifications enhance a hotel’s marketability and financial performance. Similarly, a socially responsible approach improves guest satisfaction and loyalty. As travelers increasingly value sustainable practices, hotels that prioritize ESG considerations are better positioned for long-term success in the evolving tourism landscape.