Sustainability in the Hospitality Industry - By Anjusha Chemmanur and Céline Fenech

Assessing and addressing sustainability risks in the hospitality industry

The hospitality industry is facing growing pressure to address its environmental impact and promote sustainable practices. However, while sustainability is often viewed as an opportunity for businesses to improve their reputation and attract environmentally conscious customers, the potential risk of climate change and non-compliance with the growing sustainability agenda is not yet seen as critical.

According to data from our recent Deloitte European Hospitality Industry Conference industry survey, only half of the respondents see 'climate change disruptions' as high risks this year or in a one to three year timescale, while only 39% indicated that 'non-compliance with the growing sustainability agenda' is a risk over the same time period.

What are the key risks to the European and UK hotel industries and on what timescale?

However, most consumers are increasingly concerned about climate change and the environment. According to Deloitte's ConsumerSignals, a global survey of consumers' attitudes and behaviours, one in two consumers globally (51%) are worried or anxious about climate change.

Deloitte's Sustainable Consumer 2023 survey indicated that compared with a year ago, there was a higher proportion of consumers who stopped making purchases due to ethical or sustainability-related concerns, across a number of categories including hospitality. Today, sustainable practices are essential to the health and resilience of any business, not to mention that of the communities they operate in. Sustainable hospitality will be key to the future of travel and industry leaders should ensure the sector minimises its impact while maximising its positive influence on consumers, communities, and the planet.

“Sustainable practices are indeed increasingly essential to the health and resilience of any business. The three areas of implementation outlined in the article, viz. operational updates, guest involvement and workforce engagement, aptly outline an effective roadmap for spearheading sustainability in hospitality.”

Puneet Chhatwal, M.D and CEO, The Indian Hotels Company Limited (IHCL)

Finding opportunities to minimise environmental impact.

The hospitality industry already has multiple proven, scalable opportunities to help minimise environmental impactÑand innovative programs and technologies are emerging across the industry, including:

• Energy efficiency: Hotel operators are moving beyond room occupancy sensors, weatherstripping, LED lighting replacements and making the leap to automated energy management systems, including real-time monitoring and dashboarding solutions. Energy efficiency initiatives also significantly reduce operating costs for hotels. A global hotel chain has implemented an energy management system in all its hotels, which tracks energy usage and identifies areas where energy can be saved. It also provides real-time monitoring and reporting to help hotel staff optimise energy usage. Since its debut, the company claims to have reduced carbon emissions equivalent to removing 390,350 cars from the road, while saving over $1 billion in utility costs.¹
• Renewable energy: In addition to onsite solar and wind generation, some hotels are exploring geothermal, biofuel and hydrogen fuel cell technology. A Japan based hotel group uses plastic waste to power a hydrogen fuel cell generator that creates 450,000 kWh of power while reducing CO2 emissions by 200,000 kg annually, which is equivalent to the energy required to power 25 homes for one year. Many brands are exploring large-scale renewable energy agreements that will power multiple hotels and advance the regional greening of the energy grid; this effort is going to be a large part of the sustainability and decarbonisation solution for the hospitality industry.²
• Biodiversity: Hotel companies are increasingly recognising the importance of supporting biodiversity and protecting coral reefs. Many hotels have established marine protected areas around their properties, collaborate with local conservation organisations and educate guests about the fragile ecosystems. A global luxury brand has a programme that supports projects such as coral reef restoration, sea turtle conservation, and marine protected area management. The brand also educates guests about marine conservation through activities such as guided snorkelling tours and educational talks.³
• Water usage: Hotels are conserving water by using a combination of low-flow faucets toilets and showerheads, smart irrigation controllers, and continuous-batch washing machines. An Indian hotel chain invested in a rainwater harvesting system that consists of three big reservoirs. Water collected during the monsoon months, up to 18 million litres, sustains the luxury hotel for the whole year. Solar power accounts for up to 75% of thier energy needs and supports almost all operations.⁴
• Waste management: Many hotels are eliminating single-use plastics, using biodigesters to help process food waste, donating excess edible food, using waste data to inform right-sized portions and menus, recycling, and using on- or offsite composting. A Las Vegas Resort recently diverted 263,000 tons of food waste from landfills to be repurposed into animal feed and converted into biofuel.⁵
• Chemical usage: Many hotel operators have made the switch to nontoxic, environmentally friendly biodegradable chemicals in housekeeping and other areas. A Belgian hotel changed its entire cleaning products to green alternatives, by adopting products that are C2C certified, thereby certified with a well-known ecolabel, which means that they are composed of European raw materials, boxed in recycled packaging and produced with renewable energy. This reduces CO² emissions, the use of crude oils is excluded and pollution with microplastics is avoided. Furthermore, the packaging of these products can almost indefinitely be recycled.⁶
• Sustainable sourcing: Efforts focused on seasonal ingredients, onsite gardens, and local supplier partnerships can help reduce supply chain complexity and cut emissions. A UK hotel generates much of its electricity on-site using a combined heat and power unit. Its wooden furniture was made in the UK using trees felled by storms or tree surgeons and reduces waste by upcycling furniture. The hotel also turns food waste into fuel or compost for their community vegetable garden, and their menu offers local, fresh, and, where possible, organic food sourced from producers with high animal welfare standards^.7

“Radisson Hotel Group aims to reach Net Zero by 2050. We focus on green energy and green buildings and work closely with owners to implement our renewable energy strategy and green hotel building transition. We have defined comprehensive building design guidelines which allow owners to meet the necessary credentials for leading green building labels. Our Build Planet Advance guidelines even go one step further and help them find innovative solutions that satisfy economic, environmental and social objectives as well as future-proofing assets. ”

Elie Younes, EVP and Global Chief Development Officer at Radisson Hotel Group

In sustainability as in life, however, one size doesn't fit all. A successful environmental initiative should be tailored to the particular property, considering factors such as:

• Age: is the hotel a new build vs conversion?
• Capex: does the asset need major upgrades? When was its last hard refurbishment?
• Location: what type of location is it in? Urban vs rural? Hot vs colder climate?
• Size: how big is the asset? How does the size of the property impact the feasibility of proposed environmental initiatives?
• Configuration: what is the ratio of guestrooms to public areas? Indoor to outdoor and roof space? Orientation of the rooms and public areas?
• Unique features: what services and amenities does the hotel offer?
• Incentives and penalties: do the local, regional, or national government offer incentives (e.g., environmental tax credits, subsidies) or have strict regulations and requirements (e.g., certifications, building regulations)? How could those influence return on investment?

Three opportunities for implementation

Some sustainability changes can be implemented immediately and may require little investment. Others may require a coordinated multiyear effort.

Deloitte sees three major areas of opportunity:⁸

1. Assessing operational updates: operational changes are crucial for improving hotel sustainability. To start, operators can conduct comprehensive energy audits to identify areas where energy consumption can be reduced. This may result in small fixes like changing out a filter or replacing lighting that provides quick reductions in energy usage while driving down the hotel's carbon footprint. They may also inform capital plans for larger infrastructure changes like replacing the HVAC system at the end of life. Water conservation measures, such as installing low-flow fixtures and implementing laundry and irrigation efficiency, also play a vital role in sustainability efforts. Furthermore, waste management programs, including recycling and composting, can significantly decrease the volume of waste sent to landfills. Operational efficiencies can be found throughout a hotel and often can be implemented with little to no impact on the guest experience.
2. Involving guests: hotels can turn their sustainability initiatives into an interactive experience for guests by providing information about their green practices in guest rooms and public spaces, encouraging guests to participate in conservation efforts. One island resort encourages guests to grow corals which then outplant specific species on the reefs. It also offers eco-friendly amenities, such as toiletries in refillable containers, which reduce single-use plastic waste. Some hotels even incentivise guests for sustainable behaviour, like offering discounts for opting out of daily room cleaning. Hotels should also consider seeking feedback on their sustainability efforts to prioritise actions that guests are motivated by. By involving guests in sustainability initiatives, hotels not only reduce their environmental impact but also raise awareness and foster a sense of ownership among their clientele.
3. Workforce engagement: training and educating staff about eco-friendly practices, waste reduction, and energy conservation can lead to more efficient operations and cause a ripple effect where staff bring these practices to their homes and their communities. Staff can also serve as ambassadors, promoting sustainable practices to guests and encouraging their participation. Moreover, recognising and rewarding employees for their contributions to sustainability efforts can boost morale and motivation. Ultimately, a committed and informed workforce is an invaluable asset in achieving and maintaining a sustainable future for hotels.

Take the opportunity to share the improvements transparently and honestly with your customers and owners, celebrating and reinforcing your commitment to sustainability. As your sustainability journey continues, be sure to track, quantify, and disclose your improvements in environmental and financial impact reports.

References

1. A decade of managing our environmental and social impact

2. Tokyu Hotels has unveiled the world's first hydrogen hotel in Japan (globetrender.com)

3. The community footprint

4. CGH Earth_Conservation

5. Eliminating Food Waste

6. Changing cleaning products to green alternatives

7. Sustainable hotels for a responsible staycation

8. A roadmap for sustainable hospitality | Deloitte Global

Anjusha Chemmanur

Anjusha is a Senior Manager in the Travel, Hospitality and Leisure Advisory team in London. She has over 15 years' experience in the travel, hospitality, retail and service industries, in both insight and strategy. She has held professional and entrepreneurial positions in the UK, India and the Middle East.

Shortly after completing her Master's in Business (MBA) in the UK, she joined travel technology firm Travelport, managing global projects to support the organisation's growth strategy. Prior to moving to the UK, she was a business development manager at the Le Meridian Hotels and the Royal Orchid Hotels in India. Her experience includes extensive research and strategy across a diverse range of clients and industries, supporting global companies in market feasibility and growth, insight and thought leadership, competitive positioning and trend analysis.

Connect with Anjusha on LinkedIn.

Céline Fenech

Céline is a research expert with over 20 years of market intelligence and consumer research experience predominantly focused on researching trends in the consumer industry. At Deloitte, she provides insights through the origination of research in the form of briefings, POVs and white papers. She is the lead author of the Deloitte Consumer Tracker, Deloitte's own consumer confidence survey.

Connect with Céline on LinkedIn.

This article originally appeared on Deloitte.