The hotel and hospitality sector needs to make serious effort to balance profitability with sustainability as changing consumer preferences and climate crises point towards a future where decisions will be increasingly impacted by environmental considerations.
In response to a survey at the Pandox Hotel Market Day, attendees – made up of a cross section of hotel industry experts – revealed that not only do climate factors influence their travel decisions, indicating a significant trend towards eco-conscious travel, they also expect climate to feature more in future even to the point where environmental considerations become unavoidable.
Business priorities
And this isn’t limited to consumer behaviours. Speaking at the event, Christopher Sanderson, CEO & co-founder of The Future Laboratory noted business decisions are increasingly being led by these trends, with the C-Suite placing increasing priority on making a positive difference to the environment and in the communities in which they are present.
He explained: “There’s a British beauty brand called Faith in Nature which has recently appointed Mother Nature to their board. It's a legal appointment and they have a human individual who is legally required to represent Mother Nature on that business's board. So every board decision has to go through Mother Nature.”
Faith in Nature's further illustrates how companies are rethinking governance to prioritize environmental stewardship.
Gilda Perez-Alvarado, group chief strategy officer at Accor agrees that there’s a difference in boardrooms but notes that from a regulatory perspective, different regions of the world are in different phases, with the EU way ahead of the US when it comes to ESG-related regulation.
Positively though, she noted: “But I do think that the next generation are very worried about this. And so slowly, it will catch up and we will see a more equal level of support.”
Sanderson stresses that actions like that taken by Faith In Nature – as well as those taken by regulatory authorities - are crucial, especially to the hotel and tourism industries, quoting a report by Intrepid Travel which found that the world is facing a future model of restricted travel due to the ongoing climate crisis.
“Some of the key destinations that tourists want to visit will be out of access within ten years. Or they may simply not even exist anymore,” he said.
Shift in luxury consumer demographics
With the average age of the luxury consumer set to reduce by about ten years over the next decade, according to The Future Laboratory’s Global Affluence Report, and the luxury segment currently leading post-Covid recovery and ADR growth as travellers in the segment remain largely untouched by the cost-of-living crisis, it’s clear that this next generation – which is more environmentally conscious – holds a lot of power.
“We're seeing this transfer of wealth from a whole generation who are coming to the end of their lives to a new generation. And the attitude of this new generation - of entrepreneurs of wealth, owners of wealth funds and offices - is markedly different. And I think it means that the attitude we see from say a Patagonia owner is no longer going to be the odd one out when it comes to a board discussion," Sanderson said.
Consumer education
Martin Raymond, co-founder & editor-in-chief of The Future Laboratory adds that brands also have a responsibility to educate consumers, not just about sustainability but about the heritage of the destination and the importance of safeguarding that heritage.
“We must always remember the power of brand, the power of property but also the customer. What is their judgement? So there's a lot of work we have to do to decide where we sit, because the customer is already making that decision," he said.
Perez-Alvarado agreed: “This is something that we can do better as businesses. We need to educate our audience. In the last couple of weeks, I’ve visited places that are honestly treasures, buildings that are hundreds of years old, brands that have all this history and places that are just magnificent. And so we need to educate people when they're coming into your property. What are you seeing and why do we need to protect it?”
Survival of the fittest
Looking to the future, it seems the way forward is prioritizing environmental stewardship from board level down to the personal relationship with the consumer, and being adaptable to the evolving consumer demands. Hoteliers must adapt to these changing preferences to stay relevant and competitive. This approach will not only ensure the survival of companies that adopt this and the survival of the hotel and hospitality sectors as a whole, but will also pave the way for a more responsible and sustainable future.