The tourism industry has one of the highest growth rates out of all industries in the world, accounting for 10.4% of global GDP and 319 million jobs (10% of total employment in 2018)1.. At the moment, there is no sign of a slump in this trend. In 2018, 1.4 billion international tourist arrivals were recorded (up 47% from the 2010s' 950.8 million) and the number is expected to rise to 1.8 billion in 2030. Hotels are only one of the many actors that play a big role in the industry as a whole2.
Hotels play a vital role in sustainable tourism
The demand for hotels is usually associated with the number of tourists that are seeking an overnight stay and the popularity of a destination3. Thus, when an area's tourist demand grows, demand for hotels rises, driving developers and hotel companies to rush into popular destinations. Hotels, tourism, and local communities intertwine in close symbiotic relationships due to their physical proximity of and inevitable collaboration4.
For this reason, sustainable tourism practices and ethical hotel development (that connects social, cultural and economic factors) are vital factors for both the long term preservation of culture and the social-economic stability of the host communities5. With this considered, hotels play a vital role in setting up viable operational practices as well as educating consumers on sustainable behaviors.
Consumers are increasingly seeking sustainable destinations
Not only is sustainability a growing social issue, but consumers are becoming more aware of sustainable practices in hotels as information becomes more transparent.
According to Booking.com’s 2019 Sustainable Travel Report, 70% of global travelers say they would be more likely to book an accommodation knowing it was eco-friendly, and 55% of global travelers report being more determined to make sustainable travel choices compared to last year.
The UN's Sustainable Development Goals: a Lever to lead in sustainable tourism
Sustainability is a multi-faceted term to indicate initiatives that preserve a particular resource. To address sustainability, one needs to address the four main pillars: human, social, economic and environment.
As sustainability must be a global and multi-stakeholder effort, the United Nations (UN) launched their Sustainable Development Goals (SDG) in 2015, as ‘the blueprint to achieve a better and more sustainable future for all’. The 17 goals aim to ‘address the global challenges we face, including those related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice’6.
As the SDG act as a guideline for hotels to compartmentalize each of their major operational functions (ie. housekeeping, sales and marketing, client service), how can hotels adjust their current practices accordingly?
- Identify and commit – Identify areas of major department functions (ie. housekeeping, sales and marketing, client service) with regards to ways that may impact the SDGs.
- Alignment - Align SDG with a hotel's strategy and priorities to engage with stakeholders (ie. franchisee, employees, customers etc).
- Develop target and KPIs – Create new KPIs to address new areas in relation to identified SDG. Alternatively, hotels can add new factors to existing KPIs. These KPIs will be the key to monitor and communicate progress.
- Revisit corporate strategy – Assess how existing practices in different departments can be adjusted to follow the SDGs.
- Measure, assess, report and communicate
- Measure the quantitative data collected
- Assess data for possible improvements
- Report performance and compare with set target and KPI
- Communicate with brand and customers about this effort
What are the benefits?
- Drive growth– Business growth is tied to the achievement of the SDGs at a macro level. Businesses need a resilient, reliable, educated and healthy workforce from all departments to support their workforce7. In the hospitality industry, its workforce plays a vital role to contribute to the overall guest experience, therefore, it is important for businesses to take action at a local level to drive their growth in the long term.
- Address risk– Creating a stable market means there is less risk involved in the investment. Each SDG represents a risk area that holds challenge to the business and society8. In the asset-heavy world of the hospitality industry with long-term management contracts, building a stable environment is therefore both a win for the hotel investors and management company to operate in a low-risk environment and a win for the local community to benefit from this stable lifestyle.
- Attract investment- For the implementation of SDGs, both government and private sectors have flowed cash to projects through climate-focused multilateral public funds9. In the financial sector, innovative financial models have been introduced10. BNP Paribas, for example, arranges their bond as part of its own SDG initiative where the return on investment of the bonds is directly linked to the stock performance of companies included in the Solactive Sustainable Development Goals World Index of recognized leaders in their industries on socially and environmentally sustainable issues11.
- Refocus on company value– The hospitality industry is a people-focused business. From guests to employees to stakeholders and locals, the hospitality industry’s value is rooted in creating value for others and improving the world we live in. Since the SDGs require global effort from different sectors, contributing to the SDGs is a good leap towards re-assessing values for all stakeholders. The SDGs can help hotels define their aspirational purpose, inspire stakeholders at all levels and increase shareholder value in the long run.
- Heighten brand appeal– The demand for sustainable properties will continue to rise as consumers become more aware of sustainable issues. 70% of global travelers say they would be more likely to book an accommodation knowing it was eco-friendly, and over half of the global travelers reporting they are more determined to make sustainable travel choices in the coming year compared to last year12. By advertising a brand or a hotel property's sustainable practices and activities, these brands/properties can gain an upper hand on attracting more customers.
- Appeal to a wider audience– Hotels constantly introduce new brands to relate to different age groups and accommodate different lifestyles. Despite the rise in demand for sustainable accommodations, travelers still face barriers when making sustainable travel choices - 37% of respondents do not know how to make their travel more sustainable13. Focusing on sustainable factors can be a blue-ocean strategy.
- Your effort pays off– At the early stage, capital is needed to jump-start in sustainable transformation, but the return is gradual and will eventually build long-term return13. Therefore, companies should take a real and especially complex effort to achieve relative SDGs.
Best in class examples
Accor has been the leading hotel chain in its sustainable effort. Their “Planet 21” initiative was launched in 2011 and addresses 10 of the 17 SDGs14.
In response, both Marriott and Hilton launched their own sustainability projects aimed to address the SDGs in 201815, 16. Marriott is the leader in providing transparency regarding each property’s efforts, and has pledged for the goal “that by 2020, each property will have a 'Serve 360’ section on their website with specific hotel impact metrics”17. Accor and Hilton also aim to provide property-wide transparent data at an indefinite time in the future18, 19.
Marriott, Accor, Hilton lead the best-in-class examples, nonetheless, there remains significant questions about the reporting and monitoring accuracy of their goals - an issue which should be addressed through the transparency and public availability of information from each property.
Challenges at hand
While big hotel chains have been fighting for the top spot on the podium of hitting all SDG, these companies have a big shoe to fill that impacts the company’s goal and the community around it. Therefore, it is important that the company’s CSR is created and also rolled out in a responsible manner.
Companies need to be strategic and careful when using the SDG as a tool to actualize benefit for the society in a sustainable manner instead of using it as a marketing tool for “greenwashing”, which will hurt the brand’s image in the long run.
One of the way to tackle the monitoring fairness, for example, is for hotels to consider hiring a third party verifier to ensure the consistency and these data are fraud-free – the next essential step is to assess the sincerity of hotels' devotion to the sustainability cause.