ESG stands for environmental, social and governance—and it’s increasingly on the hospitality industry’s radar. While the industry has started to focus on the “E” and implement sustainability measures over the past few years, it’s important not to forget about the “S” and the “G.” Under the social bucket, that includes things like guest and employee well-being; diversity, equity and inclusion; and human rights. Then, company ethics, fair wages and corporate/board diversity fall under the governance branch.
Owner
Steve Siegel
Partner and COO
KSL Capital Partners
“The hospitality industry, like all industries, can have both positive and negative impacts from an ESG perspective,” said Steve Siegel, partner and chief operating officer, KSL Capital Partners. “Hotels can be significant consumers of energy and resources; thus, employees, guests and other stakeholders are demanding that hotels recognize their impact and take actionable steps to improve ESG efforts.”
That’s why KSL has adopted a framework across its portfolio with each of its properties, regardless of what industry they operate in, to implement and commit to specific goals across several areas on the “E,” “S” and “G” spectrum. “Applying this framework and dedicated approach across the KSL Capital Partners portfolio has an exceptional collective impact and, more importantly, drives positive change at the local level and within the communities where we invest,” Siegel said. “Whether it’s advancing diversity, equity and inclusion efforts through employee initiatives and community engagement efforts or promoting sustainability by identifying ways to reduce emissions or implement cleaner energy sources or technology, we are continuously looking for new and better ways to support our properties and management teams around their ESG efforts.”
In addition to it being the right thing to do, leadership also believes an ESG strategy can be ROI-positive. Siegel said many target demographics, such as millennials and Gen Z, are increasingly factoring the ESG values of a company before making their final purchasing decisions. But that’s not the only reason, according to Siegel. “When acquiring a property or looking toward capital investment, adopting newer technology or making what may seem like relatively simple improvements can have a significant and often rapid impact on financial returns. ESG initiatives can both directly and indirectly enhance employee recruiting and retention as well.”
For hoteliers who may not be sure where to start with an ESG strategy, Siegel encourages to involve as many stakeholders as possible. And just start somewhere. “Pick a few initiatives that can be material to your business,” he said. “This will make the ESG efforts both understandable and inclusive. If employees in particular embrace certain initiatives, they are far easier to implement and far more likely to succeed in having the intended impact.”
Operator
Amanda Hawkins-Vogel
EVP of operations
Twenty Four Seven Hotels
“As an industry, we all need to be focused on ESG,” said Amanda Hawkins-Vogel, EVP of operations at Twenty Four Seven Hotels, adding that the company takes a holistic approach to environmental, social and governance issues. “We are large-scale consumers of energy, disposable products and hire associates across a vast spectrum of diversity and experience. We have a responsibility to all stakeholders to be mindful of our environment and community, and ensure that we are making it better.”
At Twenty Four Seven Hotels, the team is committed to ESG in its operating environment. On the environmental front, the company, where applicable, is implementing water-saving plumbing fixtures; energy-efficient LED light fixtures; thermostats that can automate energy savings by using motion- or heat-sensing technology; and exploring solar energy, especially on new-build properties as utility costs continue to skyrocket. And from the social responsibility perspective, the company is implementing a manager-in-training program for leadership development to hone its teams.
In terms of ROI, Hawkins-Vogel said there’s most definitely a pay-off—especially when it comes to the guest experience and winning requests for proposals. “Aside from the obvious savings from implementing changes at the very front lines of the hotels, guests and companies are also very invested in ESG and prefer to stay with a hotel company that does in fact have an ESG strategy,” she said.
“Not only does it drive long-term value for our investors, but it also provides opportunities for us as a company to be able to reduce our carbon footprint and improve the community as a whole in a myriad of areas,” she added.
As for where to start with an ESG strategy, Hawkins-Vogel said management companies can tap into resources from brand partners and hotel neighbors. “I would encourage starting by deciding what are the top initiatives that you want to tackle, and then work on them one by one,” she said.
Brand
Mike DeFrino
CEO
Kimpton Hotels & Restaurants
At Kimpton Hotels & Restaurants, it’s all about working to leave surrounding neighborhoods and the planet in a better place. In that vein, a committed ESG strategy is crucial for success. “With constant construction and renovation in the hotel industry, it is imperative that hoteliers focus on best practices and new innovations that will allow the industry to evolve and positively impact the environment,” said Mike DeFrino, the company’s CEO.
And it’s not just lip service. Kimpton was the first hotel brand to become 100 percent portfoliowide certified by the Green Key Eco-Rating Program, according to DeFrino. Additionally, all of Kimpton’s hotels are part of the TripAdvisor GreenLeaders program, which recognizes hotels’ leadership in environmental practices and helps travelers discover and plan stays with eco-friendly hotels. Kimpton also has a partnership with Clean The World, an organization that collects and recycles soap and hygiene products discarded by the hospitality industry and distributes them to impoverished people around the world.
It’s paying off, too, as DeFrino said there is a positive ROI from the ESG programs and strategies Kimpton has implemented. For example, the Kimpton Hotel Monaco DC in Washington recently partnered with New Columbia Solar to bring renewable energy to its National Historic Landmark building with the addition of a 265-kilowatt rooftop solar system. At peak production, the solar panel system will provide up to 25 percent of the hotel’s electricity supply. Additionally, small on-property operational shifts such as energy-efficient heating, ventilation and air conditioning units to optimize heating and cooling; large refillable toiletries to eliminate the disposal of small plastic bottles; low-flow and low-flush toilets to conserve water; a composting system for all paper, plastics and glass; and sourcing ingredients from nearby farms and food purveyors to reduce carbon emissions all contribute to long-term cost savings in addition to being beneficial to the environment.
“For us, another big factor in investing and focusing on ESG strategies is the response and appreciation from our guests, who are also striving to make changes in their daily lives that benefit the planet,” DeFrino said. “By working hand in hand on both a macro and micro level, we can start to make a real impact in both our local communities and the planet at large.”
DeFrino offered a few tips to help hoteliers get started with an ESG strategy, including:
- Start by assessing what is important to guests and employees;
- Connect with local and national charities or organizations striving to make a difference and partners with like-minded goals who can provide resources and support; and
- Assess where in your network you can make changes or upgrades to better suit the environment.