Improving sustainability in tourism & hospitality

Hospitality has been among the sectors hit hardest by COVID-19 shutdowns. But with travel beginning to return in parts of the world, many hotels are springing back to life.

The agenda for recovery cannot simply be about getting ‘back to normal,’ though. The travel market has changed—permanently. Leisure and business travelers alike have new priorities and needs. In both segments, sustainability is a bigger priority than ever before—especially but not only when it comes to carbon emissions.

Hospitality has a unique opportunity to take the lead on sustainability across all dimensions of ESG—environmental, social and governance—and build it into the core of the way the sector works. The industry players that thrive will be those who meet their customers’ demands for more sustainable travel options. Those who fall short risk being left behind.

For many business travelers—a critical segment for many hospitality brands—the pandemic put an abrupt stop to their travel. Having been forced into an extended experiment with remote working and online meetings, many corporates are reconsidering their travel policies.

What’s more, businesses are under growing pressure to cut their emissions:

• Their own customers expect it—as do politicians and regulators as the global momentum for a cleaner, greener economy grows.
• For many corporations, their Scope 3 emissions—which include travel emissions—are a clear target for reductions.
• Combined with the new emphasis on smart travel decisions and maximizing the benefits of every single trip, a rapid return to pre-pandemic levels of travel is unlikely.

When it comes to consumers, the key dynamic is a deep rethinking among consumers about what matters in life. Some 50% of consumers globally have reassessed what’s important to them as a result of the pandemic, according to Accenture’s Life Reimagined research among 25,000 people. Sustainability is high among their priorities. Consumers are increasingly ready to switch away from brands that don’t align with their values—but the research also suggests they’re increasingly prepared to pay a premium for those that do.

Despite the rising importance of sustainability to both leisure and business travelers, some in the travel sector still struggle to make the business case for it. “Resources are limited—especially right now,” says Daniel Kowalewski, Managing Director at Accenture. “Companies are in a tight spot. They’re trying to be as prudent as they can.”

That is a real predicament when cashflow has been so disrupted by the pandemic. But the question should be less whether the sector can afford greater sustainability—and more whether it can afford to fall behind its customers’ evolving expectations. Recent Accenture research has found that 83% of 25- to 34-year-olds are willing to pay more for sustainable travel options.¹ Any hospitality business that struggles to align with its customers will find itself vulnerable to greener competitors.

And the return on investment for hotel decarbonization could be substantial, relatively quickly—one study found that such investments could yield internal returns of 38% after five years.²

Some pro-sustainability switches can be made with minimal expense. India-based Chalet Hotels has committed to using 100% renewable energy by 2031.³ “In a lot of countries, you can move to renewable electricity and it’s actually no more expensive than non-renewable electricity,” says Jesko Neuenburg, Managing Director and Global Travel & Aviation Sustainability Lead at Accenture.

The Sustainable Hospitality Alliance has calculated that hospitality needs to reduce per-room carbon emissions by at least 66% by 2030, and 90% by 2050, based on 2010 levels.⁴ That level of decarbonization will require some investment—but the cost:benefit ratio is changing rapidly. With rising interest in green standards for hotels, and Google and Booking.com adding eco-certifications to search results, more and more customers are likely to make lower-carbon choices.

Some hospitality companies already have bold ESG strategies for tackling a wide range of priorities besides carbon emissions.

Waste is a key priority and food waste is particularly important:

RELATED: Explore travel’s changing realities in The Guide digital travel magazine

For the hospitality sector, impact on local communities is another critical dimension—especially in fragile natural ecosystems and in developing economies, where tourism can play a major economic role. Everyone suffers when unique destinations are damaged.

Hospitality also needs to engage closely with the communities where it operates. Supply chains are key. Procuring goods and services such as food locally can have a positive social impact—as well as cutting carbon emissions. Ensuring high labor standards is another priority. And global travel firms have a key role as local employers too, creating jobs and providing development opportunities in areas where they may otherwise be limited.

Pandemic recovery, future growth and sustainability go hand in hand. There are two critical spheres for organizations to act in to meet changing customer demands and capture the opportunities of growth and a sustainable future.

The first is picking up the pace on decarbonization. A recent report from the World Travel & Tourism Council (WTTC) in collaboration with the UN Environment Programme (UNEP) and Accenture—A Net Zero Roadmap for Travel and Tourism—proposes a new roadmap framework for net zero. It sets out three different decarbonization target corridors, recognizing that some sectors will be able to move faster than others.

The first step is setting the right baselines and emission targets now for 2030 and 2050 goals. That needs to be followed by monitoring and reporting on progress.

The report also proposes collaboration within and across industries—a rich opportunity for hospitality businesses as a part of the broader travel industry, and for collaboration with local partners wherever they operate.

Hospitality companies need to be strategic about sustainability—and to do that they need to understand why it is so important. “What’s frequently missing is the why,” says Andrew Maliszewski, Business Strategy Senior Manager at Accenture.

To truly understand those business drivers and how they can be translated into an effective sustainability strategy, Accenture has developed a new framework for Sustainability DNA. It identifies Five Elements of Sustainable Leadership and 21 management practices, systems and processes spanning all dimensions of sustainability—from improving conditions and creating inclusion for employees, to building a learning culture and engaging in the development of local learning ecosystems.

As many hospitality brands operate a franchise-based business model, it’s vital that brands and owners work together closely as they adopt the Sustainability DNA framework.