Sustainability: The pressure is palpable

Sustainability: The pressure is palpable

In this sort of atmosphere, I’m able to switch off; I can reflect and exchange views directly and in person… The feedback for the 5th edition was very positive. HospitalityInside Think Tank (HITT) was significantly more positive than the previous year. Not because summer business is good right now, but because knowledge about sustainability has grown. The issues were just as complex as last year, but among investors, developers and operators, sensitivity to detail has grown. Twelve experts formed the network and took a look further ahead – with breaks in the idyllic surroundings of the Havel.

The hot topics suited the two hot summer days in Berlin – an almost symbolic encounter with climate change. So, the kick-off took place in the less sustainable but absolutely necessary cooled room in the ship, which was moored on the quay. The seminar ship departed on time on the second day towards the Havel and open windows and a cool breeze from the water renewed the participants’ energies.

As at no HITT before, the questions bubbled vigorously, even two hours on one topic proved to be far too little. The micro-cube flew through the belly of the ship, the experts were challenged. Relaxed scenes then during the breaks on the upper deck, casually in a deck chair or intensively discussing with colleagues and experts at a bar table. The participants were in “floating mode”…. Moderator Tim Davis from London nevertheless managed to catch everyone up again for the next topic under the HITT headline “Embrace ESG for people, planet and prosperity”.

Glenn Mandziuk with the micro-cube
Glenn Mandziuk with the micro-cube in his hand. / Photo: HospitalityInside

The keynote: Although he has only been on the job for 27 days on Monday, Glenn Mandziuk, the new CEO of the Sustainable Hotel Alliance (SHA) knows his topic. Backed by 17 of the largest hotel groups in the world, all members of the SHA, and many others, including independent hotels and suppliers, the Canadian is all about the community. The hospitality community that “needs to change the conversation from competition to collaboration” to take concrete and global sustainable actions, and local communities from whom tourism takes but does not always give back.

Since the dream of a post-Covid tourism based on quality and not quantity recently imploded with thousands of passengers queuing for hours at major airports across Europe, Mandziuk advocates for “unprecedented”, “bold” actions that the hospitality industry needs to take moving forward. To get there, the latter advises to “rethink, how (we) measure success, shift from product to experiences, engage in developments, focus on inclusivity, accessibility, and climate-sensitive marketing.”

He reminded the audience during his keynote speech that on the global scale, the hospitality industry is not even close to being best in class when it comes to sustainability and responsibility. Energy, tech, healthcare, and finance are the industries leading the game. “They acted quicker, in innovative ways, and dared to challenge the status quo. We need to work and learn from them because our approach is still very conservative.”

The SHA CEO has identified immediate opportunities, hoteliers, as a collective could seize to accelerate change. Among other things, he calls for common measures, getting access to capital, creating partnerships, sharing learning, going beyond compliance, and pushing the conversation further.

“Tourism is not a right; it is a privilege. We need to understand the communities it impacts, respect them and together innovate to make a real difference and cut through the noise,” concluded Mandziuk.

Keeping an eye on criteria

Sascha Kullig from the Pfandbriefbanken (right) and Ross Petar from JLL London. / Photo: HospitalityInside

Sascha Kullig, Member of the Executive Board and Coordinator Sustainable Finance at the Association of German Pfandbrief Banks (vdp), appealed to everyone in the room to start renovating existing buildings in a sustainable manner immediately and to construct new buildings according to sustainable criteria. “We hear the same thing all the time,” Kullig said: “Sustainable finance is a great burden. It creates higher costs and more reporting, which requires more data measurement and benchmarking.”

But what is even more important: “Sustainable finance is an opportunity,” he explained. “It comes with better financing terms and a better reputation.” Kullig warned that properties that no longer met the market’s sustainability requirements would very quickly become stranded assets. He also explained the difficult, interwoven web of criteria of the EU taxonomy, ESG scores and the Energy Performance of Buildings Directive (EPBD).

Those who do not follow suit will at least pay more expensive loans in 2030. Even though many criteria are still being debated today, anyone can guess how harshly the guidelines can be enforced. According to Kullig, it’s entirely possible that non-sustainable properties could simply be deemed “unusable” – meaning any leasing falls flat. “Sustainable finance is definitely not going to disappear, it’s here to stay.”

ESG is an investment risk

Ross Petar, Head of EMEA Hotel Valuation Advisory, JLL London, described ESG risk as an investment risk. He argued for better transparency of ESG metrics and introduced the audience to other forms of sustainability measurement, such as the CRREM (Carbon Risk Real Estate Monitor).

Certainly, the commitment to sustainability is on the rise: According to equity market barometer Morningstar, USD 3.9 trillion in sustainable fund assets were under management in Q3 2021. Europe leads with 88% of global sustainable fund assets, followed by the Americas and Asia-Pacific,” Petar describes. The technical team of the hospitality-specialised Energy and Environment Alliance (EEA), together with the certification expert BREEAM, have launched a global initiative to define hotel standards (as hospitalityInside.com reported).

Show customers your options

Researcher Cris Tarrant. / Photo: HospitalityInside

To answer the question of why the industry should make sustainability the best choice, Crispian Tarrant, representing the French research and consulting firm BVA-BDRC Group shared with the audience the results of their own research about consumer perspectives on sustainability. Jumping right into the statistics, Tarrant explained that if many within the industry are still questioning sustainability, consumers are on top of it.

“Consumers don’t need educating, they need help to choose sustainable options,” summed up Tarrant who sees this as an opportunity for brands to align themselves with sustainability and take practical actions that will make a difference. Within the industry, OTAs are once again taking the lead. Both Expedia and Booking.com publish annual sustainability reports which means they believe they can monetize people’s search for sustainable travel options. “This is just a red flag for hoteliers, who should be taking things into their own hands,” warned Tarrant.

Among other things, we learned that if 71% of people surveyed are very concerned about the environment, a very small majority of travellers said it is a decision driver when booking holidays.

But the latter insisted: “Two third of the consumers want to see more sustainability info coming from lodging and transportation providers. Actually, 69% would opt for a more sustainable hotel room if given the choice even if the price was 5% more expensive. “The real challenge is between their intention and your action,” underlined Cris Tarrant.

Nudges can help motivate the sustainable behaviors of customers and guests analyses BVA-BDRC. But it won’t work with all client profiles. “Helping consumers make the best choice is crucial. Have a positive approach about it and try to overcome the sustainability information deficit,” advised Tarrant.

How to convince the franchisees?

Phil Halanen answered questions about Wyndham’s Green Program. / Photo: HospitalityInside

Phil Halanen, Head of Sourcing and Sustainability EMEA at Wyndham Hotels, couldn’t agree more. That’s why his company launched a strategic ESG framework back in 2020. “The interest in sustainability from hotels mirrors the one from consumers. Engagement in Wyndham green initiatives doubled in one year’s time,” said Halanen who shared franchisees’ practical and easy practices to adopt, regarding climate change, energy efficiency and renewable energy, water, and waste diversion.

“Taking small steps is the quickest way to see a return on investment,” said Halanen who set up a “green certification program” leading every franchisee on the path of sustainability. Next year, all should be at least at level one or level two according to the head of sustainability. To the excuse “I don’t have money to invest in sustainability” coming from certain owners, Halanen answers with a preferred supplier agreements program with the best prices on the market.

“Another way to look at it is via the ROI and share examples” he said. After using the carrot a lot, Wyndham is now also using the stick to bring the most sceptical hotel owners on board.

The return of wood in architecture

Architect Patrick Lüth from Snøhetta. / Photo: HospitalityInside

The impact that the design and architecture of a building can have on the environment was discussed in the third impulse of this year’s HITT, with the choice of building material taking up a large part of the discussion. Patrick Lüth, architect, managing director and partner at the Norwegian architecture firm Snøhetta, has a clear ranking: “Your worst enemy is concrete because it’s production emits a lot of CO2, steal is not that bad, but timber is a great solution, because it is actually storing CO2.”

To keep up with the growing demand for wood, “we have to remodel our forests”, says Thomas Kraubitz, Director and Head of Sustainability & Climate Europe at global engineering firm Buro Happold, London. This involves growing the appropriate type of trees.

Just like the experts at last year’s HITT, he too pointed to the increasing importance of standardised modules and prefabrication: “We have to get back down to more standard components that are replicable. Mostly any building you have and any hotel is a tailored suit. And we need to get them to be more like T-shirts, where you have two or three sizes that fit all.”

The wooden path is the right one, but not the only one

While Kraubitz presented technological solutions to the HITT audience, such as digital twins of buildings or “Madastre,” an online cadastre for materials, Lüth noted: “Sustainability can be low-tech!” And he proves it with the example of a building designed by Snøhetta, in which there are no electric shading devices at all. Instead, climbing plants grow at a distance of 1.5m from the windows, providing sufficient shade in summer and shedding their leaves in winter to allow more light inside the building.

Whatever their approach, Anthony Williams, Director of the Programme for Tourism and Sustainability at Buro Happold, motivated attendees to get on the road to sustainability, comparing it to the IT revolution in the late 1990s when the attitude was: ‘I’m going to invest nothing until I know what the 100% solution is’ – You can’t do that! We need to make the investments. Some might be right; some might be wrong. But the direction of travel is the minimum because there is an urgency!”

More S in ESG and even more question marks in solutions

What the words Environment and Social (E and S in the case of ESG) have in common is that they not only stand for the greatest challenges in the industry, but that in both areas the gap between those who act successfully and those who react unsuccessfully is widening. For recruiting professional Garry Levin of LHC International, quite a few human resources problems remain homegrown: The industry still fails to convey enthusiasm, remains bogged down in bureaucratic processes and does not take advantage of opportunities, including with older employees. “Selling rooms continues to be more important than finding and keeping employees,” laments the founder and CEO of Berlin-based LHC International Recruitment Consulting. In contrast, he sees a “new hippie mentality” among candidates…

From right: Katrin Melle, Hyatt; Recruiter Garry Levin of LHC, moderator Tim Davis and the talent scout Carmen Castillo Lopez. / Photo: HospitalityInside

Katrin Melle, Regional Vice President Diversity, Equity, Inclusion & Talent EMEA/SWA at Hyatt Corporation, sought to drive home to employers in the room how bitterly serious the current shift is. She did this with the hard facts: For example, 89% of people in all industries expect to be able to work from home at least some of the time after the crisis ends. In turn, only 10% of HR respondents in a study by the Ecole Hotelière de Lausanne said they had introduced a high level of flexibility in the workplace. At the same time, 51% of job seekers do not consider offers from companies that do not share their ideas about diversity and inclusion.

Every employer looks for employees in their own way. But what path leads to the right destination? Carmen Castillo Lopez, who until recently worked in the hospitality industry and is now Head of People at Upday at Axel Springer, reported on a tech-oriented hotel group that thinks diverse to the maximum, pays more attention to skills than degrees and filters this with IT support, as well as providing remote work offers for relocation options for non-European employees. Fundamentally though, Lopez also sees that there are far too few recruiters in companies to still be successful.

In any case, the pressure from outside is great. According to Garry Levin, applicants today receive an average of 8-12 job offers. The demands of the new young employees determine the to-do lists of HR departments, while hotel companies are still poking around in the fog for the “why”.

Compiled by hospitalityInside authors Sarah Douag, Malin Flamm, Sylvie Konzack and Susanne Stauss.

This was the HITT 2022 – photo impressions! Click here! 

This summary is a short extract of the entire think tank, which took place over one and a half days. Participants will receive further detailed, edited write-ups.

 

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