Fuelled by the climate crisis, green-minded stakeholders are applying ever-increasing pressure on hotel companies to reduce their greenhouse gas emissions. This is not surprising given that, according to the Department of Environment, Food and Rural Affairs (DEFRA), the carbon emissions generated per room per night in UK hotels are as high as 10.4 kg CO2e.
In response, hotel brands are considering improvements to their existing assets and scrutinising the wider sustainability of their business. Notably, there has been a focus on retrofitting and preparing for new reporting requirements on the horizon.
The reasons behind a retrofit and the extent of the retrofit can vary. Many developers are choosing to retrofit existing hotels, rather than demolishing and rebuilding new assets. For many hotel brands, changing location or rebuilding when an asset is not environmentally sustainable is not commercially viable given that many build their reputation upon a recognisable building or location. Given that hotels operate around the clock and provide an array of services such as laundry, heated pools and room service, they are facing pressure from eco-conscious guests and rising energy costs.
So... what is retrofitting? Retrofitting involves upgrading elements within a building to improve energy efficiency and reduce waste, for example:
- LED lighting in communal areas and rooms;
- Energy efficient appliances;
- Low flow sanitary fittings throughout the hotel;
- Motion sensors and key card controls;
- Solar shading; and
- Solar panels, heat pumps, biomass and other renewable alternatives.
Our recent article "let's talk about retrofitting" highlights the importance of understanding the stages of a retrofit (Knowledge; Eliminate; Mitigate; Improve; Active) to maximise its benefits. It is important to prioritise minimizing energy demands through insulation improvements and efficient control systems before replacing boiler or lighting systems. Once these are in place, hotel brands should consider introducing energy generation technologies like solar panels. Reducing the energy demands first, before installing new technologies, will likely lower both capital costs and operational costs as one moves through the retrofit hierarchy.
The rise of eco-tourism and experiential travel is changing interior design and guest offerings within the hotel sector. A green wall in the lobby, reclaimed woods on the staircases, moss planters in the guest rooms, and freestanding plants in the breakfast room provide guests with a tranquil oasis away from the hum drum of city life. This trend towards "green hotels" has led certain booking providers to create sustainability badges to make it simpler for travellers to find eco-conscious establishments. Many hotels have rebranded as sustainable retreats, promoting an ethos of minimalistic design which heightens human connections and encourages interaction with nature. Nowadays guests demand more than a room, they are looking for an experience which aligns with their values.
Ultimately, most hotel brands' greenhouse gas emissions come from Scope 3 – activities of their suppliers, customers and other third parties for which they are indirectly responsible in their value chain. While hotels have direct control over: (i) reducing their Scope 1 emissions, e.g. by retrofitting their premises; and (ii) recording these emissions, it is more challenging for hotels to reduce and report on Scope 3 emissions. The EU's Corporate Sustainability Reporting Directive (enacted in January), which will apply to EU companies and many companies with operations in the EU, and the International Sustainability Standards Board sustainability disclosure standards (of international application, and which will form the basis of the UK Sustainability Disclosure Standards) may require certain companies to report on their Scope 3 emissions as soon as the 2024 reporting cycle. In preparing their reports, hotel brands will be reliant on their suppliers and partners recording their emissions accurately and face the challenge of ensuring that they are incentivised to do so. As to the emissions themselves, hotel brands are coming under pressure to scrutinise their supply chains and encourage their customers to travel sustainably in order to meet their sustainability targets.
Hotel brands need to take a holistic view of their emissions during the full lifecycle of their assets, and the emissions generated within their own business and across their value chain. This will be crucial to ensuring compliance with upcoming reporting requirements and staying ahead of the market.
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