Hospitality must show ESG proof positive

ESG

Insight Comment
It is no longer acceptable for the hospitality industry to simply talk about environmental, social, and governance priorities. Owners, governments, customers, suppliers, consumers want action. Relatively small initiatives will make it easier to show commitment to the new priorities.

Sustainability is now a key requirement for both travellers and investors. That means the industry has to adopt a regenerative approach to business development, negate the impact of over-tourism, invest in people and the communities, and make good governance an integral part of the business process.

This was the central message at one of the last sessions of Resort & Residential Hospitality Forum 2021, hosted in person at the Tivoli Marina Vilamoura Algarve Resort in Portugal.

Several panellists spoke convincingly about relatively small steps taken towards bigger goals.

Margarida Caldeira is head of hospitality and chair of the EMEA board at Broadway Malyan, the international practice of architects, urbanists and designers. She spoke of the lessons developers of new properties could learn from what she termed the “vernacular”, that is, the building methods and materials used in the locality before the arrival of tourism.

During Caldeira’s time at Broadway Malyan, the practice has designed high-profile leisure, hospitality and workplace schemes in Iberia, Africa and Latin America. She was project leader for the refurbishment of the prestigious Tivoli Avenida Liberdade, Avani Lisboa and Tivoli Carvoeiro in Portugal as well as for Trópico Hotel in Luanda and Tivoli Beira in Mozambique.

It was in Mozambique, working on an internal design project, she used wood carvings bought from local markets in the decoration. “I hope it really helped the community and helped feed the families of the artisans for many months.”

Ana Beatriz,a consultant who established ABC Sustainable Luxury Hospitality in 2021, questioned the use of mini-bars in hotel rooms. She asked whether these were still wanted by visitors pointing to the energy savings that would come from removing energy-sapping refrigerators.

Beatriz’s affinity for the hospitality industry became apparent very early in life. She was born in a hotel where her mother was general manager.

The panel discussed broader ESG themes as well, noting that the ‘social’ aspects of the ESG debate were most relevant to the hospitality industry. It was essential to treat workers well and also to engage with people who lived locally.

Ioannis Orfanos, the founding partner at Arbitrage Real Estate Advisors, said many investors would only provide the capital required by residential resorts if they were presented with demonstrable evidence of commitment to ESG priorities.

Orfanos has more than 15 years of experience in real estate investment, management and advisory work. He brings real estate development, sustainable investing and green finance expertise. He works mostly in London and Athens with international investors and PE firms to originate, underwrite and manage commercial and hospitality real estate investments. He also provides expert advice on green finance mechanisms and promotes strategies for sustainable value creation in commercial property portfolios.

He also said that progress to date had been slow partly because of the difficulty measuring adherence to ESG targets. He said progress was delayed in the past because of the belief that: “You cannot monetise that which you cannot measure.”

He said that if resorts want capital, support from regulators, customers and brands they need to embrace sustainability. If they don’t, they will feel the financial pain of dwindling popularity.

Net-zero carbon targets have the advantage of being measurable. But hosting the session, Maribel Esparcia Pérez, founding partner of ESHClub, which sets out to promote the importance of sustainability in the hospitality business, pointed to the danger that ambitions around carbon would mean other critical ESG considerations were ignored.

Pérez is certified in environmental, social and governance leadership skills by the International Society of Sustainability Professionals (ISSP). Pérez has worked in operations at international chains and independent boutique four and five-star luxury properties in London and Barcelona.