Near term targets and measurement key to longer term ESG change

Hotel brands are facing huge challenges when it comes to addressing their ESG performance, with many of the major groups now committed to net zero by 2050. However, with this target still a long way off, the impetus has moved to creating shorter term objectives that are more tangible to all the players in the value chain – and that ensure the groups do not slip behind the sustainability curve.

One of the key areas for this is to find ways to align the interest and activities of owners, hotel brands and their operational and franchise partners. Another vital factor is to work out what changes will have the most impact.

With the need to deliver on its commitments, Hilton Senior Director Energy & Environment Paulina Bohdanowicz-Godfrey says that the worldwide hotel operator has upgraded its targets for Scope 1 and Scope 2, with the aim of a 75% carbon reduction by 2030 for its managed portfolio and 56% across its franchise portfolio. It also has water and waste reduction targets of 50% by 2030 under the company’s Travel With Purpose programme.

“We are focusing on our brand standard for ESG and have 13 years’ worth of data through Hilton LightStay [the company’s sustainability data initiative],” she says. “We provide feedback, forecasting and benchmarking and also forecasting to the onboarding hotels. We also share it with our owners to help with their own objectives.”

Bohdanowicz-Godfrey believes that personal incentives make a massive difference and says that as far back as 2011 Hilton put a programme in place for its engineers, and made their performance in ESG part of their bonus package.

“It is also the same now for the operator manager. It always helps if there is something in it for the individuals,” she adds. “For the younger ones it’s often the recognition of their ideas being implemented within the company that matters.”

Setting near term targets

While the company has made a commitment to be net zero by 2050, Radisson Hotel Group Global SVP Sustainability Inge Huijbrechts reflects that this is “a long time way away”, and says that by 2030 “we need to roughly reduce Scope 1 and Scope 2 by half, and Scope 3 by 30%”, which are nearer-term targets.

“We are greening the buildings, focusing on renewable energy and greening our operations,” she says. “We need to understand that long term profitability is about sustainability. We need to do massive steps by 2030, less than seven years away. It is about going first to where you have most control, so talking to our leased buildings first and then showcasing what we have achieved to our franchise. Some, including our partners in Finland and Georgia, are already doing this because they have their own targets.”

Currently of the group’s worldwide real estate portfolio, 5% of its hotels are certified as green buildings, which she describes as good but leaving a long way to progress.

“We are going through our portfolio, one by one, to bring up to BREAM Good or Very Good or equivalent and taking that to partners to look at how we work together,” says Huijbrechts. “The main thing [among the various factors] is the buildings and what we need to invest. It’s very important to work with the operational people but they only impact about 5% of the total change.”

Invesco Director Alternative Investments Capucine Pedrazzini agrees and says that the investor tries to be a “vocal force” in ESG and stresses that while the measurement of data points by the operators is very valid, stresses that “for us it’s a given that we get the data, the question is what we do with it. And that’s where sometimes we find a lack of commitment on site. Where we have had success is where we have been able to persuade the onsite team.”Pedrazzini believes that ESG should be part of a budget process, with incentives, strategies and the ability to measure performance.

“We all have the same targets but there is a gap,” says Pedrazzini. “So we need to sit down and discuss.”

EV charging as a service

Within the wider scale projects, there are also specific initiatives that can help improve sustainability ratings, not least electric vehicles and the demand for onsite charging facilities.

On EV charging, Hilton Group’s Bohdanowicz-Godfrey insists that this is not necessarily straightforward: “We need to look at the carbon emissions impact and whose they belong to [the hotel or the vehicle drivers]. We have about 1,500 chargers worldwide, because the customers think we should have them, and this number is growing.”

Radisson’s Huijbrechts describes EV charging as the “new free wi-fi” and says that the group currently has 700 charging points and is rolling them out “wherever we can and where we have the parking facilities, in places like India where you might not expect them.”

Although this has a positive impact on its ESG status, Huijbrechts says that she ultimately sees this not so much as an element of the company’s ESG work but as part of the company’s guest services and customer experience.

“We’re in this together, our Scope 1 and 2 is the owners’ Scope 3. So let’s talk,” says Huijbrechts of making further change.

Union Investments Director Henning Schneekloth-Ploger adds that such change can only come through measurement and assessment and says that the company tries to invest in energy monitoring systems and to act as a “pioneer investment partner” in improving the performance of its assets.

“It has to really come down to the specific assets themselves,” stresses Schneekloth-Ploger of th approach to the building stock.

He believes that “transparency has improved hugely since Covid” and says that if the hospitality industry can come together and look in real detail at the supply chain across everything to ensure that changes are worthwhile, then significant progress can be made.

In particular, he stresses that real estate improvements should make an impact regardless of who the operator is and whether they change or not.

“We need to remember that the end of the lease is not the end of the building,” he says.

All those quoted in the article appeared on stage at the International Hospitality Investment Forum (IHIF) held in Berlin between May 15 and 17, in a session called - Aligning Owners and Operators’ Sustainability Strategies