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.
Changing priorities, new opportunities
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.
In the post-pandemic battle for market share, winning customer sentiment and loyalty increasingly means meeting the new expectations on sustainability.
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
Investing in decarbonization
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.
Responsible hospitality gets started
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:
bottles expected to stop going to landfills every year. By replacing single-use toiletry bottles in rooms with larger pump-topped bottles, Marriott International has made waste a key priority.5
of Accor's generated waste and largest contributor to its biodiversity and water footprint comes from food—so it’s made food a priority in its latest sustainability strategy.6
tons of food waste were diverted from landfills by MGM Resorts, repurposed into animal feed and converted into biofuel.7
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.
Positive social impact begins inside the business
Truly sustainable businesses don’t only take action to reduce and mitigate their external environmental impacts. They also take responsibility for their role as employers in addressing major social questions.
If employers don't act on today’s prominent social issues—be it increasing the number of women in leadership roles, reflecting racial and ethnic diversity or implementing fair labor standards in their supply chain—customers will quickly lose trust.
Hilton Hotels plans to achieve gender parity in its leadership roles globally by 2027 and increase ethnic diversity among its US leadership roles to 25%.8 Its approach has earned it the number one spot on DiversityInc’s 2021 Top 50 Companies for Diversity list.9
Social impact also extends to the sector’s critical role in the fight against human trafficking. Progress has been made on this issue in recent years: It needs to remain a priority. Marriott International, for instance, launched an enhanced version of its human-trafficking awareness training in July 2021, to help its people recognize and respond to the warning signs.10
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.
The sustainability opportunity
The landscape for hospitality has changed permanently. The sector has a unique opportunity to lead the way on sustainability as it gets back to growth.
The benefits for hospitality are clear: aligning with consumers’ values and desire to be able to travel sustainably; winning back business travelers as corporates bear down on their carbon emissions; capitalizing on the growing willingness of consumers to pay a little more for sustainability; and playing its part in the global effort to limit temperature rises and avoid catastrophic climate change.
Thriving in the new world means putting sustainability at the heart of your strategy for recovery.
Accenture helps travel companies outmaneuver uncertainty in a new era of travel.
Frequently asked questions
The landscape for hospitality has changed permanently. The sector has a unique opportunity to lead the way on sustainability as it gets back to growth. The benefits for tourism and hospitality are clear: aligning with consumers’ values and desire to be able to travel sustainably; winning back business travelers as corporates bear down on their carbon emissions; capitalizing on the growing willingness of consumers to pay a little more for sustainability; and playing its part in the global effort to limit temperature rises and avoid catastrophic climate change. Thriving in the new world means putting sustainability at the heart of your strategy for recovery.
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 sector operations. 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. Research by the Sustainable Hospitality Alliance has found that hotels need to reduce carbon emissions by at least 66% per room by 2030, and by 90% by 2050, compared with 2010 levels, to keep pace with the 2°C cap set out in the Paris Climate Agreement. Improving building efficiency will need upfront investment, but the cost: benefit calculation is changing. One study has found that decarbonizing hotels could yield internal returns of about 38% after five years. With rising interest in green standards for hotels and the addition of eco-certifications to search results, more and more customers are likely to make lower-carbon choices.
Of all the challenges facing the travel and tourism industry as it becomes more sustainable, decarbonization is the biggest. Greenhouse gases related to travel are one of the most significant contributors to our environmental footprint, along with the electricity we use in our locations. Additionally, the travel industry’s impact on its stakeholders across the societies where it operates is significant—especially in many developing nations, where tourism plays a major economic role. Tackling environmental initiatives is not simply limited to energy sources, but also its social impact on communities. This includes ensuring high labor standards that advance diversity in the workplace, create sustainable supply chains, cut carbon emissions, and drive economic development opportunities.
The UN Global Compact and Accenture report published in November 2021, Climate Leadership in the Eleventh Hour, found that 73% of global CEOs feel increasing pressure to act on climate change. Fifty-seven percent are prioritizing action as part of their pandemic recovery. This explains why more than 5,000 businesses have joined the UN-backed Race to Zero, committing to achieving net-zero carbon emissions by 2050 without using offsets. More than 200 companies have signed the Climate Pledge to achieve net zero by 2040. That pressure on CEOs will not just change their companies’ operations—it will filter through to their supply chains. Leadership teams need to convert their organizations’ sustainability goals and values into behavioral change at all levels, which means building sustainability into the DNA of the organization.