Accommodation services were one of only three sectors of the UK economy to see their energy intensity increase over the past three decades, according to a report from Ignite Economics.
The study found that accommodation services had increased by around 10%, against a fall of 53% for the UK as a whole.
Energy intensity was described as the amount of energy used to produce a unit of economic output.
A closer look at the UK accommodation industry revealed that it had increased its energy usage by 47% since the turn of the century (2000-2018) – more than any other industrial sector.
The accommodation sector had also grown by around 70% during this time, however, Ignite Economics still estimated that the industry could save 15% to 20% of its energy usage, which was up to £270m/yr, or up to 660m kg/yr of CO2.
Ed Birkin, CEO, Ignite Economics, said: “There is no question that the long-term trends in energy usage in the UK are all in the right direction: total energy use is down; energy intensity is down; the proportion of fossil fuels is down and the usage of renewables is growing exponentially. However, some sectors of the economy are doing much better than others and in the accommodation sector, there is clearly scope for considerable savings.”
Ufi Ibrahim, CEO, Energy & Environment Alliance, outlined some of the options open to the sector. Speaking to us, she said: “Technological hardware and software, and many service providers, are already active in our industry. Many offer the opportunity to reduce energy usage. It is also possible to switch from brown to renewable energy.
“However, investing without proper analysis of a property or portfolio’s current energy consumption and how that compares with peers, has downside risks. So, the first step should be to analyse energy performance over time and in real-time. This analysis may highlight opportunities for quick fixes requiring zero to minimal investment, such as operational changes in the conferencing suite or the kitchen. Understanding how a hotel’s energy performance compares with peers can also highlight areas for immediate improvements and can also guide investment decisions. This in turn significantly lowers risks related to the acquisition of new technologies or services.
“Red Carnation Hotels is a great example of a group that is rewiring their business to be socially and environmentally sustainable. They are signed up to 100% renewable energy, which is a great start, but they have gone one step further with a wide range of initiatives around waste reduction in energy, food, the sustainable sourcing of products, plastic elimination and better energy conservation. Importantly, they have implemented data monitoring technology and are analysing energy management across all their hotels. They have allocated funding for energy investment projects and are engaged in building proprietary industry benchmarking with the Energy and Environment Alliance.”
Ibrahim looked to the drivers for change in the sector. She said: “The Ignite Economics research shows that the accommodation sector is the laggard on energy usage and energy intensity. The analysis identifies a significant opportunity for savings across the sector amounting to £270m p.a. and 660,000 tonnes of CO2. This may be a reflection of the industry’s focus on the demand, rather than supply side of the business. Productivity gains have historically focused more so on labour productivity, rather than systems, procedures, design or technologies. The impact of Covid-19, the acceleration of regulation and the ground swell of consumer demands for change on climate grounds, will heighten pressure on hotels to make significant changes. There will always be leaders, gaining first mover advantage, while others will follow. The EEA is proud to work with the leaders.”
Insight: Ibrahim chaired a roundtable on sustainability at last week’s AHC Reimagined joined by David Kellett, senior director, hotel transactions, Invesco Real Estate and Ian Duncombe director, chapmanbdsp.
The panel agreed that sustainability was becoming an issue for investors as well as guests, which was motivating change. Brands may have been worried that owners might not follow them into sustainable practices, something that was now shifting. We have seen that this year as investors realise that there may be, in the not too distant, a chance that energy-efficient buildings might carry a resell premium, as they do in the office space.
However, it was agreed that carrots and sticks were much needed and for this comes the need for a motivated government. This suffers from a fair amount of regional variance - in the UK there was a good deal of green chat recently, although no action - and further motivation may have to come in the form of the customer. The danger here is that sustainable building and operations are feared to cost more, which has been shown to be untrue, but where investors nonetheless need to be educated.