Leaders are pressured to do the right thing, choose the right product and services, and deploy the “right strategies” that allow company growth year after year.
Not to mention the challenges that emerge along the way, especially in long and messy processes, such as asset pre-openings, re-branding or retrofits.
To create value in the industry, hoteliers need to audit their strategies and daily operations to ensure purpose-driven, value-based decision-making.
In a recent article, Mckinsey pointed out why environmental, social and governance (ESG) criteria matter. The business externalities (or impacts) are real, and they intensify over time. Thus, this connects us back to the basics of business purpose. I share below, the four main areas of criticism mentioned in the article and what it means for hotels.
1. “ESG is not desirable, because it is a distraction”
Working towards regeneration and sustainability cannot be based on additive and occasional strategies and policies. It has to be fully integrated into the business, foundational to company strategy.
Hotels have an opportunity to rethink the business model and create positive impacts. It is fundamental to analyze current business impacts and pressures on natural ecosystems, biodiversity, local communities and the workforce.
2. “ESG is not feasible because it is intrinsically too difficult”
It is easier to implement ESG in a way that resonates among multiple stakeholder groups when the hotel has a clear purpose and the intention behind it is to truly create long-term value for all its stakeholders.
3. “ESG is not measurable, at least to any practicable degree reflected in ESG scores, cannot be accurately measured”.
ESG are measurable however, global public and private entities are making an effort to provide standardized approaches to sustainability reporting that allows clarity and transparency.
Hotels can start to create their sustainability strategy and align corporate interests to nature conservation and human rights so when upcoming regulations – such as Corporate Sustainability Reporting Directive (CSRD) or Human Rights Due Diligence – are mandatory, they already have the data and the strategies to report on the disclosing requirements, and more importantly, they are taking action now.
4. “Even when ESG can be measured, there is no meaningful relationship with financial performance”.
Even though acronyms and sustainability language continue to evolve, especially with upcoming regulations and enhanced reporting requirements, companies still need to make changes today.
What matters is why are we doing this in the first place. Without nature regeneration and societal stability there is no tourism. For hotels and groups to succeed in the long run, they must count nature and biodiversity conservation as the core of all their business activities.
What do service and significance mean?
Today’s managers are under pressure and investors are looking for agility, bright strategies, and resilience. Furthermore, governments and communities are increasingly expecting businesses to support social issues and tackle global social and environmental sustainability challenges. Being service at the core of the tourism industry and hotel sector business model, we have an opportunity to turn externalities around. We can make regeneration the way forward in hospitality.
Thus, we should expect the different sub-sectors to use the service to find solutions to global challenges.
The Service & Significance Model
The perception and expectations of the relationship between business and society are changing. The levels of trust in brands are decreasing, and consumer behavior is evolving at a fast speed. The educated traveler understands that just because the hotel has a certification does not mean it is sustainable. As well, not having one does not indicate that the property is not operating the asset correctly. Now, more than ever, hospitality industry leaders have an opportunity to refocus on Service and Significance.
Service and significance is a new paradigm, where hospitality leaders are rethinking business models and making purpose a priority. Here are some actionable tips to bring the hotel essence to life:
- Never Assume. Never assume the information we have is up to date, actions ticked and, therefore, done.
- Genuine Appreciation. Consider the business stakeholder relationships, from the guest choosing your property to the employee choosing your brand.
- Observe and listen. Observe guest behavior and think about solutions before they ask for them. Observe the team and listen to their training needs and aspirations to achieve career fulfillment.
- Engage guests in meaningful activities. A great example is engaging guests in conservation activities. Upscale brands connect with clients in meaningful experiences that bring value to local communities, support regeneration, and protect local biodiversity and natural ecosystems.
- Think and execute based on long-term strategies. Industry stakeholders taking accountability for every investment plan and project considering environmental, social, and governance criteria is essential.
- Hospitality is a business that depends on natural resources, landscapes, climate, social stability, and many other factors. With issues such as natural disasters, weather conditions, involuntary migrations, political conflicts, and water scarcity, companies have to measure their impacts and start creating operational processes, governance and due diligence to achieve real challenges and meaningful outputs.
- Deploy empathy. Create an environment where everyone feels safe to say how they feel or what they lack in terms of resources to do their work or share creative ideas. Spend time every day thinking about the business purpose, mission, and vision. When we practice empathy at the workplace, it is easier to enable people-centric innovation. To do so, it is imperative to create an environment where teams can thrive regardless of adversity. The work environment should be one where employees understand the company’s mission and strive to achieve the company’s vision.
- Employees and Customers. Dedicate time to reward small milestones and achievements. Celebrate employees’ achievements and always reward them. Customers wise, knowing what brands they like and use, wine preferences, food, and dietary requirements, room preferences, events celebrated, even shoe size if needed! Every detail will count in the guest experience.
- Gather data to build a regenerative culture. Not only accomplishing KPIs matters, training employees about other fields, not only work-related such as CRM or PMS, or health and safety. Collect data to help teams to be at their natural best and reward innovative capabilities. Instead of focusing on the next quarter, think about how to improve and positively impact the next generation.
- Technology implementation. Use technology to support this transition and be more efficient in implementing sustainability strategies in hotel operations.
Travelers are increasingly looking for hotels that address pressing social and economic issues. If that essence and intention is brought into the hospitality industry, it can bring the most value to customers, local communities, and employees. And only by doing so will shareholders maximize returns on their investments and assets.
True sustainability and regenerative practices that consider ESG criteria, are consistent with a well-considered strategy that advances a company’s purpose.
Excellence and best service is always about quality above quantity. Only operating from a quality and value-driven approach will bring the most value to business stakeholders, touching and impacting people’s lives positively.
The hotel or hotel group’s purpose and how it aligns with the culture and corporate strategy. This is fundamental to understanding how the company interacts with societal and environmental thresholds and challenges.
In summary, successful hospitality brands and hotels are conscious and aware of risks and opportunities. They act upon them while serving guests, creating a better future for younger leaders and conscious travelers.
Hotels and hotel groups must approach environmental and social challenges as a core strategic opportunity to create a future-proof organization and deliver meaningful impact over the long term.
Maribel Esparcia Pérez
ESG Sustainability Expert
ABC Sustainable Luxury Hospitality
Proudly Ambassador Global Wellness Institute
Happiest Places to Work – Awards