The Luxury Sustainability Conundrum
Climate change is one of the most significant challenges society is facing, but we are currently trapped in what feels like a phony war. We know we should act, but there is limited international guidance as to how and little immediate legislation to respond to.
Motivation to adopt more planet-focused strategies comes from three routes: law, cost, and the customer, and it is the latter that is driving the most change in the sector.
A study from BVA BDRC[1] found that consumers wanted to be more sustainable and were calling on companies to “help me help,” creating an untapped opportunity for hotel brands. Given the choice between similar hotels and similar choices, with one offering better sustainability offerings, an overwhelming majority chose the sustainable hotel.
Luxury hotels find themselves in a contradictory position. Their guests have been identified by BVA BDRC as the most likely to be willing to pay a higher rate for a more sustainable product – allowing for a clear ROI on green investment – but luxury hotels also put the highest strain on natural resources, of any segment.
According to the Sustainable Hotel Alliance, a hotel can use an average of 1,500 liters per room per day, which can vastly exceed that of local populations in water-scarce destinations. In some locations, tourism uses over eight times more water per person on average than the local population.
A recent study in Barcelona, a city currently under water-consumption restrictions, found that five-star hotel guests used more than twice the water of a three-star guest and more than three times that of a local resident.
Those same guests are more likely to object if asked to cut back on steamy showers or wonder why they cannot enjoy their favourite out-of-season fruit at breakfast, or their favourite wine from another continent at dinner. The luxury experience is built around indulgence and indulgence is not synonymous with showing restraint, a restraint which is now required.
The surge in travel after the pandemic illustrated another contradiction: we are all aware of the pressures caused by over-tourism, but everyone wants to see Venice. The solution may well be increased charges, but, as a sector, we should also be encouraging off-season travel.
In the hotel sector, we suffer from a lack of information about how sustainable hotels are – there is no clear system of reporting. Without a solid benchmark it is hard to communicate actions and their values to consumers and, while there are a number of different accreditations, there is no clear awareness of what each one stands for, and how credible they are.
This lack of credibility puts hotels at risk of accusations of greenwashing, which makes any sustainable investment pointless in terms of marketing opportunity, if not in terms of the positive impact on the planet.
Consumer demand for clarity will only grow, and hotels must be clear on what they are doing and clear in how they are communicating with them. The cynicism of guests is hard to dissuade when we look at some of the practices we see in hotels around the world, even those who purport to be environmentally aware.
Communication and education must go hand in hand, with sustainability claims verified by credible, external providers. Guests prefer to see a holistic approach, with multiple actions, not just a few signs about using fewer towels or plastic straws. They are well aware from their daily lives of what constitutes a truly sustainable act or not. They will be checking menus to see the provenance of their food and drink, checking for electric car charging points, and even checking to make sure that, like a budget-conscious parent, lights are not left blazing in empty rooms.
Your asset manager should be at the core of an effective, sustainable hotel operation. The large hotel brands all have sustainable strategies with varying levels of credibility, and investors will also have concerns over incoming legislation and worries over their assets being stranded. The asset manager should be targeting alignment across the property, from development to operations.
With a credible rating system yet to be standard across the hotel sector, guests will come with their own judgement, and it is important to ensure that the property meets it. The recent energy crisis in Europe has driven many hotels to install technologies to reduce consumption, many of which won’t be visible to the guests, but don’t be shy to let them know what’s happening.
If it is clear that the hotel is trying to make a real difference, the guest will be more inclined to join in and cut short that shower, ask about the local wine, and turn off the lights. We’re all in this together.
[1] https://www.bva-bdrc.com/wp-content/uploads/2023/10/Sustainability-green-paper-Jan-2022.pdf
Alex Sogno
CEO & Senior Hotel Asset Manager
Global Asset Solutions
