As business travel gradually returns, there is a recognition within the industry that sustainability – and particularly a focus on the environment – will be crucial in coming years. From interviews conducted at the International Hotel Investment Conference (IHIC) in Berlin in September this year, and the Business Travel Show at the end of the month and into October, participants from ground transport to travel management companies and airlines to hotels spoke of sustainability.
Cynics will say we have been here before. Similar noises have been made in the past, and what followed the statements of intent was price cutting, expansion and growth. Will this time be different? Perhaps it will, because the world has changed. Interviewees all mentioned the Covid-19 pandemic which has not only forced a re-think of the way companies and individuals organise their business travel and thrown up questions about whether all trips are necessary, but also the intention of many governments – and perhaps societies – to ‘build back better’.
There is also the renewed focus on the environment, not just because of the forthcoming COP26, but because the scientific evidence for climate change, confirmed amongst the majority of scientists for decades is now increasingly showing itself in natural disasters. Estimates for the contribution transport makes to carbon and other missions varies, but as other industries and market sectors reduce emissions, those of transport – and particularly aviation – come into focus.
Add to this the focus on ESG investments (Environmental, Social and Governance) by the financial community – airlines, hotels and transport companies rely on finance just like other sectors, and so will rely on ESG ratings to continue to attract money – and the millions of employees working in the industry who expect companies to ‘do the right thing’, and it could be that this time is different. Here’s what we learned speaking to the industry in recent weeks.
Radisson Hotel Group
Federico J. Gonzalez is CEO of Radisson Hotel Group
“The hospitality industry needs to move on this, and I think it will. We are part of the Sustainable Hotel Alliance and also members of the World Travel and Tourism Council which has its own initiatives on many of these matters including climate and environment action; single-use plastic reduction, biodiversity and inclusion and diversity.
“Remember that governments have not regulated us on how to clean the hotels. When Covid hit, every company was doing their own protocols and so many of the hotel companies helped to come up with the WTTC Safe Travels so that any country in the world could apply. That means the regulators didn’t need to regulate, but if we had not done this, then they would have done.
“The same can be true of sustainability. We have been talking with many other hotel companies to push beyond the situation where every brand has its own programme, which is confusing, and instead come up with global hotel hospitality standards, and that would be 10 or 15 things so that any hotel in the world should be able to do them. We as an industry want to be net zero, but is it realistic for an independent hotel in the middle of nowhere that they should be net zero? They would say “How do I start? I don’t even know how to measure it.” And so we have the protocols which start with not using plastic, looking at waste, recycling and so on…. We need to create those standards and I am convinced we will do it.
“If any consumer wants to come to Radisson because we are sustainable, then that’s great, but if we market it as a point of difference with other brands then we end up in a game of claims which is irrelevant to a lot of customers. I don’t see this as a competitive advantage. It’s more about how we can drive the industry to do this.”
Wyndham Hotels and Resorts
Dimitris Manikis is President for EMEA at Wyndham Hotels and Resorts which has brands including Wyndham, Ramada, Days Inn and Registry Collection.
“We are a franchise model, so we don’t manage these hotels, but we have sustainability as a target in terms of operations with the Wyndham Green certification programme, but ESG is more than just making sustainability training mandatory. We have also made human trafficking training mandatory and we now have engagement tools to make sure the hotels are keeping engaged with the staff. Hospitality needs to be interesting again. It needs to be something that the young see as a career path.
“Part of that comes from having a social purpose. In India, we had franchisees telling me that they were proud that the hotels gave food to the local community. We opened up rooms for them to stay in when they didn’t have hospital beds, so that sense of purpose is important and we shouldn’t let go of it.
“Whether it’s food waste or the environment, these are meaningful actions that all of us in hospitality need to take care of. And we need to remind ourselves of this every time we do a deal for a new hotel or bring new partners in. Hospitality is about the passion that people have in this industry, and that’s been shown in the way that the hotels have responded during the Covid-19 period. The repurposing of jobs will be a big thing in our industry, and this feeds in to the ‘Social’ part of ESG. Repurposing will improve some of those jobs, for instance, the front office person who becomes a relationship manager, or organises excursions and builds the guest experience. Keeping people motivated is important, giving them good jobs which they enjoy and want to stay in.”
Conscious Certified Hotels (CCH)
Raoul Thomas is CEO and founder of Miami-based CGI Merchant Group which has a partnership with Hilton to open three new brands of ‘conscious’ hotels.
“Consumers are focussed on seeing meaningful change, so our decision was to have a unique operating model attached to brands and values, and for us, that was brands centred around an ESG strategy. We think the standards for the E and G (In ESG) are there for us – we have green buildings, we will be energy efficient and we will be mindful of recycling, but we want to focus on the Social part.”
“What we are saying is that we will give one per cent of top line revenues to the communities around our properties, and over time that will be millions of dollars over the year. We believe that the communities around us have to thrive for our investment to have value over time. It doesn’t make sense to have a beautiful high rise building in an urban core where everything round it is impoverished. The more we can impact and drive development and make progress in those human needs around us, the more the value of our asset goes up.”
“We would want to try and encourage the guests to experience the investments outside the hotel. So, for example, if we make micro loans to a nearby restaurant, then we would encourage them through the concierge to go and experience the farmers market and dine in the neighbourhood at that restaurant, and we believe from our studies that they want that sort of experience beyond the walls of the hotel, and we think that outreach and engagement will bring a lot of brand loyalty.”
“On the business side, our studies have found that people will pay a five per cent premium to Average Daily Rate (ADR) and will also stay longer. We think also that as you go through cycles in the hospitality market, customer loyalty will be stronger where they see strong brand values. So we are saying this is accretive over time, but to be clear, this one per cent of top line is coming out of our share, not the consumers. It’s not a levy on the hotel room. And we want to make sure that we can measure the good that has been done, and we have contracted with a third party group to measure it, so if you stay in one of the hotels you can see the different the money has been made.
“So far we have two hotels in Miami: one of which will be the Gabriel Miami Downtown and we have just acquired another hotel on Ocean Drive which will become the Gabriel South Beach. In total we have three brands: the Celino brand which will be under the Hilton LXR brand, the Gabriel which will be under the Curio, and the Kelsey which will be under Tapestry by Hilton.
“We have also signed for another hotel in Atlanta which will open in 2023 as a Kelsey. It is next to Atlanta Morris Brown College, a Historically Black College and University (HBCU) built in 1881, with a campus which is a stone’s throw from the Mercedes Benz Stadium, home of the Atlanta Falcons NFL. The university is launching a hospitality programme, so we were able to get Hilton to help to develop the curriculum, extend its personnel as visiting professors of the programme, and we can also recruit the talent from that programme for our hotels. You can do good while making money.”
Uber for Business
Christophe Peymirat is Head of Uber for Business, EMEA
“When we speak to our corporate customers in Europe they are asking for three things. They ask about the safety, both in terms of cars and also during the pandemic with masks and hygiene. They also ask about cost efficiency, and then finally it is around sustainability. All the big corporates whether financial services, consulting, media and pharmaceutical companies want to know the carbon emissions we are generating with their travel. Through their Travel Management Companies (TMCs) they get this sort of CO2 reporting on their flights, and they want it from us on ground transportation. And that’s where we have a number of initiatives, mostly around Uber Green.
“We have our Clean Air Plan which is a commitment to be fully electric in London by 2025, and the same for Amsterdam, and 50 per cent fully electric in seven other major European cities, and by 2030 fully electric in most European markets. So we are supporting and incentivising drivers to buy the cars and encouraging the manufacturers to provide the cars. We need to create a second hand market. It’s difficult but we have no doubt it’s the right thing to do. We are also working with partners such as BP to install the infrastructure with fast charging.
“In the UK we have 70,000 drivers on the platform, and in London 50 per cent of uber cars are hybrid, which is the first answer. But to get to 2025 that will be full electric. No hybrids is what we are aiming for.
“So that is a big push coming from consumers, but has also materialised in the Request For Proposals (RFPs) we are answering from the procurement people from the large corporates. It’s a prominent expectation. If you have nothing to answer you are not part of the equation.”
Manuel Brachet is Vice President of Commercial and Customer Success
“Covid accelerated the sustainability agenda, because Covid got companies to reset their travel programmes and, because of that reset, they have embedded sustainability as part of their travel programmes. As a TMC we provide choice to our customers. In the online tool, we have an air / rail dual display, so if you take a flight from London to Manchester it serves the option of also the train, and we’ve had that since June 2021. It’s a phenomenal functionality. Allows us to juxtapose those two – you’ve got alternatives here, what would you like to do.
“We partner with UK’s Department of the Environment, Food and Rural Affairs (DEFRA) for the carbon offsetting of hotels, but we tend to find our corporate clients prefer to define what is a sustainable hotel based on their particular criteria. That said, we have a supply team out signing up new hotels and acquiring Egencia preferred rates from hotels that our travellers can book, and while they are doing that they are also providing input to the hotels about the criteria of sustainability that are being valued by clients, so it works that way as well.”
Reed and Mackay, Trip Actions and Neste for Sustainable Aviation Fuel
(Travel Management Company, Reed and Mackay, along with travel and spend management company Trip Actions and SAF-producer Neste have teamed up to offer Sustainable Aviation Fuel to Reed and Mackay’s corporate customers.)
Chris Truss is International Development Director and Head of Sustainability at Reed and Mackay.
“The reason that we sought out this partnership is because of the vast amount of demand from our clients to travel sustainably. Our clients are all professional services companies, so their Scope 3 emissions are a huge part of their carbon emissions and they are all setting targets to reduce those emissions. There are other options for reducing carbon footprint, such as reducing travel and offsetting, but allowing our clients to use SAF produces an immediate and very effective total reduction in carbon footprint.
“We are at the start of stimulating the demand and making it more achievable for everyday travellers and businesses to use SAF. At the minute we look at individual clients, analyse their travel spend, the airlines they are travelling on and then Neste quotes a price, so it is on a case by case basis. We have one client signed up which wants to fund 50 per cent of their overall carbon footprint through the purchase of SAF in the first year.
“Every single client I have spoken to about this sees this as part of their travel programme going forward. They all want to travel less, but when they do travel they want to do it in as sustainable way as possible, and this is a great way of doing this. It provides that absolute reduction. And we have clients who also offset as well.”
“We’ve had good conversations with United and Air France-KLM about their SAF programmes. This solution provides the ability for a corporate to aggregate rather than having multiple direct agreements with airlines. But ultimately as long as the SAF is being bought and paid for we are all happy. But we have a huge Climate Care for offsetting. We also contextualise the amount of carbon for a set flight, saying a particular journey would be the same as heating your house for a few weeks or months.”