ESG

Why resorts should look at opportunities in the S of ESG

A panel of experts has highlighted the opportunities for the resort sector in the social aspect of Environmental, Social, and Governance (ESG).

Speaking at the International Hospitality Investment Forum (IHIF) in Berlin earlier this month (4 May), the group agreed on the importance of ESG to investors and buyers.

Bruno Hallé, partner and co-head of hospitality Spain at real estate services firm Cushman & Wakefield, said it was “a must” with ESG becoming “part of the negotiation more and more”. But he also pointed out that “it definitely pays back”, with resort operators that focus on the social aspect of their business positioned as a good company to work for – a bonus given the sector’s staffing challenges.

Javier Arús, senior partner at investment and asset manager Azora, highlighted the “huge impact” resorts can have on remote destinations in creating career paths for local communities, especially when the season is extended. Azora owns four- and five-star hotels in Europe and North America with a particular focus on the Spanish resort segment and has invested more than €3b into 70 resort assets.

“Socially it’s much better to give to your employees a full-year contract than three to eight months,” agreed Hallé, who discussed resort operators “breaking the seasonality” and giving guests a reason to travel in March or February. “If we really beat that point with the connectivity then we can be profitable working many more months,” he added, highlighting the dependence destination resorts have on third-party operators transporting guests to locations as a challenge to overcome.

“The all-inclusive today is not the all-inclusive of 30 years ago – there’s a different quality of asset and product, which means different quality of customer and purchasing power,” added Javier Coll, group president global business development for North American resort brand manager, travel and hospitality business Apple Leisure Group.

He said that while some governments were still concerned about the impact of resorts on local businesses, he offered Cancún, Punta Cana and Playa del Carmen as positive examples.

“[There] you have more bars and restaurants than ever, that is the impact of the all-inclusive, the multiplier effect of having high occupancies is more flights and more people… this is the example we give to governments worried about all-inclusives coming to their islands.”

María Zarraluqui, global development VP at Spanish hotel chain Meliá Hotels International, said that ESG increases the real estate value of a product while making it more efficient and decreasing costs. She said that Meliá’s renovation of the Gran Meliá hotel in Menorca had reduced the property’s carbon emissions by 85%, reducing energy cost exposure by more than 50%.

Meanwhile, Rosa Brand, director at private equity company KKR, suggested that guests becoming more aware of their carbon footprint and seeking holiday destinations they can access without flying could benefit the holiday parks segment. KKR acquired Roompot Group, a holiday parks operator in Europe, from PAI Partners in 2020.