Sustainability in the Hospitality Industry

This is the second in a series of articles about key sustainability themes in the hospitality sector. In the first article, we provided an overview of these key themes.

Sustainability has become a major competitive advantage for hotels by offering a way to differentiate themselves in the market. More and more consumers are prioritizing sustainable practices, meaning the hotels that adopt green initiatives can attract these eco-conscious travelers. As consumers demand increased transparency and corporate responsibility, hotels that actively mitigate their environmental impact can improve their reputation and brand loyalty.

Sustainability practices not only appeal to the increasingly eco-conscious consumer, they also provide additional competitive advantages through operational cost savings (e.g. energy and water efficiency, waste reduction, etc.) and risk mitigation through alignment with current trends in international regulation.

To showcase the impacts of their sustainability initiatives, prove their claims are not greenwashing and differentiate themselves further in the marketplace from their peers, many hotel chains have begun tracking and reporting specific sustainability metrics.

Metrics

The hospitality industry uses multiple metrics to monitor and track sustainability performance. These include SBTi Net Zero Targets and respective achievements against those targets, interim emissions reductions, waste diversion, water consumption reduction, relevant certifications (e.g., LEED) and other social measures (e.g., pay practices).

The World Sustainable Hospitality Alliance has launched Universal Sustainability Key Performance Indicators (KPIs) for the hospitality industry. These KPIs include:

• Energy: Measuring the amount, intensity, cost and energy source consumed.
• Greenhouse Gas Emissions: Calculating the carbon footprint based on total CO2-equivalent emissions across Scopes 1, 2 and 3.
• Water Consumption: Tracking the amount of water used.
• Waste Management: Monitoring the amount of waste generated and how it is managed.

These are designed to standardize sustainability measurement within the hospitality industry, providing a consistent, transparent and verifiable method for assessing and reporting sustainability performance.

Energy

Crucial energy KPIs for effective energy management in hospitality include energy consumption, energy intensity, energy cost and renewable energy usage.

Consumption refers to the amount of energy a business uses to power its operations. Of course, the level of consumption drives the cost of energy and, in most cases, the carbon footprint corresponding to that consumption.

The time-tested adage reminds us that you can't manage what you can't measure, and energy is no different. To track and measure energy consumption, hotels can utilize meters and submeters, smart meters or energy management applications. These tools can provide real-time data on energy consumption, allowing the properties to identify hot spots, peak usage periods and energy-intensive processes and quickly identify waste. By implementing energy-efficient measures such as equipment upgrades, optimized systems and employee awareness campaigns, industries like hospitality can significantly reduce their energy consumption, resulting in substantial cost savings as well as a reduced carbon footprint.

Intensity measures the amount of energy used per unit of production or activity. In the case of hospitality, think about the amount of energy used per room night sold or the amount used per guest per stay. By calculating and monitoring energy intensity, hotels can identify inefficiencies in their operations and take steps to optimize usage.  Thereafter, they can consider optimization actions such as investing in energy-efficient equipment and reviewing and streamlining energy-consuming processes, which collectively can help improve their energy intensity and allow them to operate more sustainably.  

Moreover, improving energy intensity often leads to increased productivity and operational efficiency. Businesses can streamline operations, reduce waste, and enhance productivity by identifying and addressing energy-intensive processes. This will not only reduce energy costs but also improve competitiveness within the industry.  

Costs are typically a factor of your location, your energy provider and your consumption.

Renewable Energy Usage helps reduce an organization's carbon footprint. As discussed below, renewably sourced energy (ex., hydro, solar, wind) generates no carbon emissions. The hospitality industry is transforming with a shift towards renewable energy sources. Hotels and resorts are adopting solar, wind and geothermal energy to reduce carbon emissions and meet the growing demand for eco-conscious practices. Solar energy, in particular, is being widely adopted due to its cost-effectiveness and the availability of tax incentives. Wind power is also being harnessed at significant scales to generate clean electricity. These initiatives reduce energy costs in the long run and enhance the brand image of hotels as eco-conscious businesses.

Energy accounts for 3 to 6 percent of hotel operating costs and 60 percent of their carbon footprint. On average, US hotels spend $2,196 per room annually on energy. Energy consumption has increased 25 to 30 percent over the last decade and is forecasted to continue growing due to more demanding standards and the development of electronic equipment. In total, the hospitality sector consumes significant amounts of energy annually, totaling around 20,910 gigawatt-hours (GWh), enough to power approximately 1.2 million homes.

Greenhouse Gas Emissions

The Greenhouse Gas Emissions from the hospitality sector is a factor in their energy consumption at the site and the source of their energy. For example, suppose you source your energy from a utility that generates its power from renewable energy like solar or wind. In that case, there will be zero carbon emissions from energy as these are all renewable sources. On the other hand, sourcing from a utility that relies on fossil fuel-generated energy will drive a significant carbon footprint.

An entity's carbon footprint is measured based on total CO2 equivalent emissions across Scope 1, 2 and 3. Based on the SASB materiality index, the most relevant emissions categories for the hospitality sector include:

Category 14 is particularly relevant for franchisors, as it requires them to account for the emissions generated by their franchisees. Given the extensive network of franchises in the hospitality sector, this can significantly impact an entity's overall carbon footprint. By accurately tracking and managing these emissions, hospitality companies can better understand their environmental impact and implement strategies to reduce it, ultimately contributing to their sustainability goals. In the USA, over 70 percent of hotels are branded properties under major chain names or have some form of affiliation with a larger hotel brand.

Water Consumption

Around 25 percent of the world's population faces very high levels of water stress, making them vulnerable to the impact of drought or increases in water use. Effective water management is not just about direct water use. Purchasers also need to consider the impact of the products they buy and the access organization employees and the local community have to clean water and sanitation facilities. Water-related issues are likely to increase as climate change is expected to affect the water cycle. Some areas will become drier while others will become wetter, and there's a high chance that extreme weather events will increase in frequency.

The average hotel room consumes between 100 and 400 gallons of water per day. This high level of water usage is driven by various factors, including showers, toilets, laundry and landscaping.

Waste Management

The hospitality industry generates significant waste, including food waste, packaging, and other materials. Properties can generate excess waste by using single-use plastics, sending uneaten in-hotel restaurant and kiosk food to landfills instead of food banks, or not deploying convenient recycling streams for guests. These seemingly small sources of waste quickly take on a magnitude of global importance when you consider a typical four-star 200-room hotel that uses 300,000 single-use plastics in one month, and there are estimated to be 17,500,000 guestrooms in 187,000 hotels worldwide.

The Scale of Hospitality Requires Technology and Automation

In the hospitality industry, managing over 17 million guest rooms around the globe is a complex, major undertaking, often made easier with the help of technology. From IoT (Internet of Things) edge devices and sensors to in-room smart technologies, to sustainability measurement and reporting tools, they each contribute to more efficient and smooth operations within the sector and help ensure it continues to thrive in today's competitive and environmentally conscious markets.

Sustainability measurement and reporting tools help ensure the accuracy of an entity's measurement and reporting, reducing human error and related compliance risks. These tools often help realize higher levels of control and supervision over sustainability data, which is typically housed in multiple disparate mediums and with different access controls across many locations in an organization. Sustainability measurement and reporting platforms allow organizations to track environmental and social impact sources across their entire organization and supply chain. Tracking activities that generate GHG emissions at granular levels (such as property or supplier) enables the identification of hot spots within the carbon portfolio. These platforms have expanded to track waste generation metrics, water consumption data and more, making the most modern platforms a single source of truth for sustainability teams across the world. 

IoT devices allow for real-time data that can be analyzed to optimize energy and water usage and improve guest experiences. The Internet of Things (IoT) is revolutionizing the hospitality industry by connecting various devices and systems to create seamless and efficient operational environments. For example, IoT sensors can adjust lighting and temperature based on occupancy, reducing energy waste and enhancing guest comfort.

Smart Room technologies offer personalized and automated environments, enhancing guest's comfort and convenience. They enable guests to control room settings such as lighting, temperature and entertainment systems through voice commands or mobile apps. Smart Rooms can adapt to individual preferences, creating tailored experiences to enhance comfort and convenience. 

WWT can assist operators in identifying the hospitality industry's relevant metrics and data sources and implement the technology solutions to automate data collection and analysis. These solutions identify hot spots and other opportunities to optimize operations and reduce costs in line with current sustainability commitments. Contact WWT's Sustainability Solutions team for your consultation today.