A look at sustainability in the hospitality industry came into sharper focus at Hotel Management’s recent executive roundtable sponsored by Procell InSite by the Duracell company. The event, held at the Michelangelo Hotel in New York City in February, brought together a mix of hospitality pros who examined critical environmental, social and corporate governance metrics, challenges and best practices to ensure a better tomorrow.
The three P's of sustainability— people, planet and profit—are a well-known business concept. The principles are intertwined and often interdependent.
"Cost and ROI are huge component of how well we can execute anything on the sustainability front, said Sage Patel, vice president—strategic initiatives + investment & feasibility analysis for PM Hotel Group. “When you have ownership groups that are very dedicated to it, it's a lot easier. When the ROI is not readily apparent, sometimes the brand mandated requirements are all some ownership groups can reasonably afford."
To streamline property sustainability efforts, Patel noted that PM Hotel Group has created SOPs for their properties over a couple of years thanks to the company’s sustainability and energy committee. “We also launched PM’s Green Team, comprised of above-property personnel, regional VPS, for both operations, sales, and a select few GMs. [We] get together and ideate how we can increase touchpoints within our sustainable communities… So these SOPs are proving to be critical on a day-to-day basis. Education and literacy [are] the two biggest hurdles we have. Not everything is just about reducing your carbon footprint… it's all these little things, adding up to the big picture that's coming down from our support center, and slowly but surely being adopted accordingly,” he said.
“One of our focuses is executing the table stakes,” said Justin Jabara, president, Meyer Jabara Hotels. "[Recycling] is low-hanging fruit and doesn’t really cost much. In many cases, it's beneficial to you because [you] reduce your waste bill. Certain things have a big impact or are easy to implement and make a difference. From an ops side, it's just producing on those things.”
Look at the water meter at four in the morning, he continued. “If the water meter’s running at four o'clock in the morning, you've got a leak somewhere. It's simple things like that. A lot of our focus is around energy consumed, water consumed, gas, electricity, which feeds into the economics of the properties.”
Gabby (Gordon) Buck, vice president—finance, Pebblebrook Hotel Trust, agreed with Patel that owner buy-in is critical. “We don't operate hotels, but we have very close relationships with our operating partners,” she said. “Depending on which brand management company you're working with, or third-party operator, it's also a push and pull.”
Additionally, crowdsourcing good ideas is good for business. Buck said that Pebblebrook works with about 14 different management companies and finds ways to apply best practices across the portfolio. “We have about 200 sustainability-related best practices that we put into play at all of our hotels.”
A Balancing Act
“Hotel companies, for the most part, don't own real estate, they’re in the business of collecting fees, whether it's franchise or management fees,” said Daniel H. Lesser, co-founder, president and CEO of LW Hospitality Advisors. “It's just a different business model than a hotel owner, and or hotel owner/operator who’s working more for profits. The hotel companies are working for profits too, but it's easy to come up with brand standards. You have to make sure that the ownership community can justify it from an economical perspective. And then if the government steps in and mandates it, well, guess what? The cost of it is going to get passed on to the consumer.”
But balancing profit and planet is often tricky.
“One thing that sticks with us a lot is that gap between intent and execution on the consumer level when it comes to sustainability and energy-related practices,” Patel shared. “Surveys say, ‘Oh, of course, they'll pay for it.’ But then you see the data. And that's not the case at all. It's just this intent to do it.”
Among the select service and extended-stay products, he said, “if we didn't have the basic brand mandates, the reality is most of these ownership groups probably wouldn't do anything extra. The only segment he said his company has seen a real willingness to pay for sustainable options is luxury, “which is unsurprising, right? When you're charging the ADRs that you can at that level, it's simple to make everything as sustainable as you truly want it to be.”
Timing often plays heavily into sustainability elements being added to hotel operations. New builds now frequently include a focus on sustainable elements when they can be completely incorporated into the underwriting, whereas support for renovation efforts funded by CapEx dollars is harder to come by.
“It's being tested from an economic feasibility,” Lesser agreed. “It's not just being done blindly, without trying to figure out what the exactly the profit model is.”
“I think that's where a lot of opportunity is for our industry,” Jabara said. “Operations, there's low-hanging fruit, but retrofitting assets; to the extent you can successfully decarbonize a hotel and eliminate the gas and electric bill… you can take that to the bank.”
“People are such a big part of sustainability,” noted Adrift Hospitality COO Beck Blasko. “One thing that was helpful for us as an organization was when we went for our B Corp certification in 2018. A lot of the data that we had to collect was around our HR practices and employees. We had to calculate things like turnover and retention [statiscis], ensuring we are paying our employees a living wage, and that we have a wide range of diversity throughout our organization. That was so helpful for us, when it came to creating a space of ‘this is where [we are].’ And every two years, when we go through the recertification we are provided with updated metrics that we can continue to build on and help when making future decisions.”
Sustainability and Accountability
“Brands are aware that there's an enormous number of properties that need to go through intensive CapEx right now that were deferred through the pandemic,” Patel said. “Of course, it's better for the guest experience, better quality for the hotel. But I wouldn't be shocked if they were to charge an actual dollar figure for us not being able to hit it. I think the way the brands will keep everyone accountable will be more likely around GSS and making sure that guest satisfaction is the primary component.”
“I think the challenge will be solved very shortly, because it's inevitable, the government will step in,” Lesser said.
Buck said figuring out what the regulations are going to end up looking like is one of Pebblebrook’s biggest struggles. “When you're trying to figure out cash, what are our Scope 3 emissions, upward, downward? It's really complicated. And from the public-facing side, we have to publish an ESG report every year now. It's not that a lot of our investors are clamoring for it, but on the European side, people are much further along. And so we have to report on things like that, and we have to be held responsible for it. But also, for us, our stakeholders are really the shareholders. If the shareholders wanted something that we have to do, but then you explain to them the costs… I've watched their faces… As soon as it gets mandated, and we're going to have to do it anyways. And that will probably change a lot of the dynamics of the push and pull.”
Hotels that incorporate sustainable practices into their operations are poised to benefit from changing consumer preferences. But can a “greener” hotel use sustainability as a selling point? On the brand side, likely yes, said Jabara. “But if you're a mom-and-pop operator? I mean, you’ve got to pay the mortgage.”
Blasko shared that Adrift piloted a program with [Kind Traveler] as a conduit for local philanthropy. With any hotel who has signed up to be a part of Kind Traveler’s program, there's a donation by the guests to a local organization of the company’s choosing, and then the company matches that donation. “Ours is $1 per night. And we match $1. It goes to our local community center that provides free childcare, events and other community resources. That mindfulness, it's very financially rewarding for our community,” she said.
Patel agreed that he could see each of PM’s lifestyle hotels doing that “because it's just on brand for what the ethos is” at those properties. “And frankly, no one is upset about the additional dollar,” Blasko added.
No Pain, No Gain
Profit notwithstanding, there are challenges and pain points that hotels encounter when addressing issues of sustainability.
“One that I feel comes up when people are traveling [is that] they don't want to be thinking about climate change,” Blasko said simply. “They want [their trip] to be a luxury experience, even if it's not a luxury hotel. And it's just not naturally something that you want to think about or care about while you're on your vacation and you want something that feels special and you want all the little things. So [traveling] just is naturally not a space where that's top of mind.”
To that point, Patel said the education and literacy around sustainability is critical. Having people on-property who are constantly thinking about it and finding ways to remind guests that there's an eco-friendly culture is important, but he acknowledged that is hard to do.
“One of the best things that came out of COVID was housekeeping on demand,” Jabara said. So when we talk about alignment, housekeeping on demand aligns with everybody, it aligns with your green initiatives, servicing the room less, which means I'm changing less linen, which means I'm using less cleaning products, etc., etc. A lot of brands have gotten away from that—housekeeping every day now.” And, Lesser pointed out, customers have, as well.
“Which ties back to, are they willing to pay more? Or what is the consumer preference?” Jabara asked. “So there's still misalignment of the industry and where the customer is.”
“We're naturally in an industry with a lot of turnover,” Buck noted. “You can give all these values to employees one day, and then a week later, it's totally different. And so, having to have someone who can constantly enforce that and make sure everyone's on the same page is really hard when your staff naturally turns over all the time. It's a very unique business from that standpoint.”
Sustainability Starts at the Top
Buck said that Pebblebrook started an initiative called the Green Ambassadors, where somebody on property, likely the GM or the department of engineering, is responsible for bringing the messaging to the hotel team regarding what Pebblebrook is doing on the sustainability front. “It's got to be someone on the executive level, who is probably more likely to stick around,” she said, noting that while she would have been happy to be the one to introduce the initiative, having it come from top leadership was important to how it would be received. “If it doesn't come from the top, it's never going to get implemented.”
Regarding hiring, Patel said, for a luxury property, the GMs being hired likely already come from a hotel that they were already implementing similar things that you plan on doing regarding sustainability. From there, he conceded, “it just gets a lot harder… the lower you go down on the chain scale, to get someone to have buy in for something they've been doing for 30 to 40 years, they [may] have no intention of learning something new.”
LEED certification is becoming more and more well-known, “but that's really hard in the hotel space to get unless you're developing from the ground up,” said Buck. “I think it resonates with people, but I don’t know, even as a guest and someone who's aware of sustainability, if I was comparing two hotels where one is LEED certified, would I necessarily stay there? But it is a big point in the ESG world.”
“What sustainability will never unseat is location,” Lesser stated to nods of agreement from panel participants. “It’s the number one driver of selecting where a traveler is going to stay. [Sustainability] is never going to unseat that. It may get up on the list of criteria, but first, it's location, and then within that location, maybe they'll get to sustainability as an attribute of that.”
Buck said she feels that Gen Z has voiced that sustainability is really important to them. “Some of the younger people who work at our company are really excited about that. That generation seems to be … much more focused on it than anyone I've talked to. And I don't know if we'll start polarizing our customers, if we don't do that kind of stuff. I think it as time goes on, it's probably going to get pretty important.”
Whether you're select service hotel or a full service hotel, from an operations standpoint, if you execute on the “low-hanging fruit” properly, you’re covering 80 percent of it, said Jabara.
“If we just recycled properly and [didn’t] throw it in the trash at the end of the day, you actually have the recycling bins, the housekeeper is putting it in a recycling bin and the trash and separating it. That checks all the boxes all the way through, you should save money—you're less on waste, hauling it, doing right for the environment, what you purchase, how you purchase, as you do capital improvements to the hotel—all of these things add up. From our viewpoint, if you can execute on the core deliverables very well, that's a great first step. Whether you're a select service hotel or full service hotel, it just gets magnified by 500 keys.”
“You pick up nickels, nickels become dimes, quarters, dollars, and, it may be small amounts, but when you add it all together, and it becomes a durable saving, it's not just a one-time savings,” Lesser added.
“We put rooms on motion detectors, public space, because [if you] just walk around a hotel, you'll find all the savings,” Jabara explained. “The freezer door is open, the water is running, the lights are all on and in the room, the air conditioning is turned on, the ballroom [is set] to 65 [degrees]. And nobody's in it all night! It’s low-hanging fruit, which is right in our face every day as operators. We can deal with that right away. Some of these bigger issues take large amounts of capital to deal with, which might not be present.”
Blasko shared that while she does believe many of Adrift’s customers are excited about their sustainability certifications she hears even more often from staff who are excited to join the team due to their company values, “I know that we have had a lot of staff who specifically work for us because of our values and who are excited about our B Corp certification. It has helped with retention and also motivates some individuals to apply at our locations versus the one right next door.”
“It comes down to your culture,” Jabara agreed. “Within your culture, you're great stewards of your community. And, and so this is no different than investing into your community and, and your hiring practices and how you support the charities and host your community within your hotel. This is just another pillar of doing what's right.”
“It's the fundamentals of hospitality,” Lesser said.