ESG Strategy at the Upcoming FHS
The Future Hospitality Summit (FHS) 2023 kicks off in Abu Dhabi in two weeks’ time, with ESG and sustainability-related discussions high up on the action-packed agenda.
With 2023 being the UAE Year of Sustainability, COP 28 taking place in Dubai this winter and ESG becoming more and more important to investors and customers, what are the key trends, challenges and priorities for the region’s hospitality sector, according to industry leaders?
Jonathan Brown, Chief Portfolio Officer of FHS host sponsor Miral Group, says that the path to sustainability across the UAE’s leisure, entertainment, and tourism industry has been charting promising transformation in recent years, emboldened by visionary national strategies towards clean-energy and net-zero objectives.
“A heightened focus on climate action is guiding leading players across the industry, including our efforts at Miral. Our ambition to accelerating the realisation of the Emirate’s tourism growth and contributing to the industry’s ecosystem is underpinned by a commitment to creating value for our customers, partners, and society, and positively impacting the communities in which we operate. Ultimately, the key to balancing growth with sustainable development lies in collective action, strategic partnerships, and long-standing investments. This is how we – and the industry at large – will define success in the years to come,” he added.
In the run up to FHS, five industry stakeholders have shared their views on what the sector is already doing – and what must be done in the future – when it comes to investing in, developing and executing effective ESG strategies. Read on for insight from Haitham Mattar, Managing Director, IMEA, IHG Hotels & Resorts; Richard Williamson, COO of Considerate Group; Fahad Abdulrahim Kazim, CEO, Millennium Hotels & Resorts, MEA; Paul Stevans, COO, Premium, Midscale & Economy Division, Middle East, Africa and Türkiye at Accor; and Elie Milky, VP Business Development, Radisson Hotel Group.
What are you currently witnessing in relation to the hospitality sector’s investment in ESG and sustainability?
Haitham Mattar, Managing Director, IMEA, IHG Hotels & Resorts: With a massive footprint across the globe, the tourism and hospitality sectors play an important role in working towards a sustainable future. At IHG, we embrace our responsibility and opportunity to make a positive difference, and helping to shape the future of responsible travel. In 2021, we launched “Journey to Tomorrow”, a 10-year action plan of clear commitments to drive change for our people, communities and planet, aligned with our purpose of True Hospitality for Good and to the UN Sustainable Development Goals. Journey to Tomorrow embodies IHG’s strengthened commitment to make sure we do what’s right, not just what’s needed. We are determined to contribute towards positive social and economic change, to stand up for key issues such as diversity, equity and inclusion, and human rights, and to make more responsible environmental choices.
We have achieved a lot in these areas over the last few years, but this is a long term issue which will challenge us to deliver on new ambitions — including how we continue to promote wellbeing in the workplace, champion an inclusive and diverse culture, and advance human rights. We’ve supported our surrounding communities, improving the lives of millions through disaster relief efforts, tackling food poverty, or by providing skills training that drives social and economic change. We’re also working towards reducing carbon emissions, eliminating single-use items and moving to reusable/recyclable alternatives, as well as reducing our food waste.
Richard Williamson, COO, Considerate Group: ESG interest and investment by the hospitality sector is definitely picking-up pace, with ESG now a significant part of the agenda at events at conferences such as FHS. Up until last year, Considerate Group often found itself as the principal ESG advisor reporting into the CEO or CFO for a hotel group or owner. Now in 2023, we more often find a Chief Sustainability Officer (CSO) owning the agenda, with a dedicated ESG budget. Our role has evolved so that we now habitually provide advice and support to the CSO. This reflects the change in ESG engagement moving from a warm, slightly ‘woolly’ industry, to a more quantitative, data-led stage.
This evolution is driven by four key factors: tightening regulation, stakeholder reporting requirements, asset-level carbon footprint analysis and climate risk and resilience. A clear ESG strategy is now critical to unlocking finance, be it green loans, general bank lending or equity investment. To support the sector, we are working across the value chain with providers of finance, looking to make measured long-term commitments to the hospitality sector.
Fahad Abdulrahim Kazim, CEO, Millennium Hotels & Resorts: The hospitality industry's investment in ESG and sustainability is becoming increasingly robust and essential. We are witnessing a significant shift as more hotels and resorts recognize the long-term benefits of incorporating environmental, social, and governance considerations into their business strategies. This investment is evident in the adoption of energy-efficient technologies, waste reduction initiatives, community engagement programs, and responsible sourcing practices. As consumer preferences align more with sustainable choices, the hospitality sector's commitment to ESG is not just a trend but a necessary path to secure a greener and more resilient future. As one of the fastest-growing hotel management companies in the region, Millennium Hotels & Resorts understands that our customers, investors, employees and suppliers actively choose their relationships with the Group. Increasingly, this choice depends on the degree to which we demonstrate corporate social responsibility: behaving ethically and legally, treating our employees with respect and consideration, finding ways to minimise our impact on the environment and doing what we can to improve the lives of those in the broader community around us. The hospitality industry has taken a step back to re-analyse how the structures function and implement the best, sustainable practices to move forward in line with internal and external expectations and introduce authentic and genuine ESG programs.
Our 2023 sustainability vision aims to reduce environmental impact through sustainable practices, including energy and water conservation, single-use plastics reduction, and obtaining ISO14001 Certification by the end of this year. As part of our corporate philosophy, we view ourselves as an active partner in the communities where our hotels operate. We seek to establish and nurture long-term relationships with residents and organisations by supporting local small and medium-sized enterprises. We have launched several initiatives, including partnerships with local SMEs to supply goods and services to our hotels. Most recently, we partnered with Watermelon, a leading food and beverage procurement platform, to incorporate locally sourced produce at our hotels in the UAE. At Millennium Hotels & Resorts, we remain dedicated to leading this charge and setting a strong example for sustainable hospitality practices.
Paul Stevans, Chief Operating Officer, Premium, Midscale & Economy Division, Middle East, Africa and Türkiye at Accor: As a world leading hospitality Group, Accor has been a pioneer in bringing sustainable development to the hospitality industry for more than 30 years. We drive transformation by collaborating closely with our hotel owners, partners and stakeholders to embed sustainability across all activities, making a positive impact on people and nature, which are two fundamentals at the core of our practices.
We have witnessed that by embracing technological advancements, leveraging data, raising awareness among employees, encouraging sustainability initiatives and offering green solutions, we ensure that our hotels contribute more than they consume. This is achieved through the three operational pillars, “Stay” reinforcing sustainable hotel operations, “Eat” embracing a sustainable food chain and “ Explore” promoting the local ecosystem and new ways of traveling.
As climate change increases with each passing year, more and more travellers are choosing hotels that prioritize environmentally sustainable practices and sustainable hospitality is becoming the norm. This transition is not only a strategic priority but also a fundamental necessity, as it becomes integral to the hospitality industry's functioning. ESG practices are no longer optional; they have evolved into essential requirements for staying competitive, attracting guests, and maintaining long-term viability. Guests' increasing awareness of sustainability means that hotels that do not adhere to sustainable practices risk being left behind, while those that prioritize ESG considerations are positioned to thrive.
Elie Milky, Vice President, Business Development, Radisson Hotel Group: The hospitality industry's commitment to ESG and sustainability has grown exponentially in recent years. At Radisson Hotel Group and across the broader sector, we've witnessed a paradigm shift from sustainability being a 'nice-to-have' to a fundamental core value. Today's guests are more educated and discerning and pay a premium on ethical and sustainable practices. As such, investments in ESG reflect our ethical responsibilities and become vital for business resilience and long-term success. Initiatives like sourcing local produce, reducing waste, conserving energy and water, and community outreach programs are all concrete manifestations of this commitment.
What do you see as the biggest priority for our industry when it comes to sustainable development and operations?
Haitham Mattar: As the largest industry in the world that contributes 10 per cent to the world’s GDP, green tourism and skill development are two of our biggest priorities when it comes to sustainable development and operations. The hospitality industry has recognised the importance of green tourism for a long time. Our actions in the coming years and beyond will shape our industry and consequently, the planet. Today, it is more than necessary for major hospitality players to align with the 17 Sustainable Development Goals that will create a wider change throughout the industry.
At IHG, caring for our people, communities, and planet are at the heart of what we do. Our strategic efforts have already incorporated the same through ‘Journey to Tomorrow’ — our 10-year action plan which will play a key role over the next decade in driving green tourism. Playing our part in the sector to combat climate change, we’re actively liaising with our hotels in measuring and managing their environmental impact; this includes optimising energy consumption across all hotel operations as well as reducing our owners’ operating costs to mitigate the impact of any unexpected energy price hikes. Furthermore, we’re working hand-in-hand with brands to reach our decarbonisation goals, reduce water and food waste and protect biodiversity. A recent example of our anti-waste efforts is IHG’s collaboration with water.org to provide lasting access to safe drinking water and improved sanitisation solutions for 5,000 people across India and Kenya.
Skill development and recruitment is also critical. We must creative initiatives and opportunities for local talent to not only have jobs but fulfilling careers, because local talent are the best ambassadors of local hospitality. At IHG, training, hiring and developing local talent is an ongoing focus: in the Middle East, we have training programmes and job opportunities in Saudi Arabia, the UAE, Qatar and Oman reserved especially for local youth. We also recently launched a campaign aimed at encouraging Saudi nationals to consider careers in the hospitality industry. By 2030, our target is to hire 6,000 Saudi nationals, while also heavily working on our emiratisation and omanisation programmes in collaboration with governments and industry bodies. Our growing ambition in developing and hiring local talent is supported by IHG Academy — a pioneering global collaboration between IHG and local education and community providers to build local capabilities and hire highly-skilled nationals.
Richard Williamson: Stakeholders’ increasingly structured ESG expectations continue to drive the hospitality sector. Hotels are complex businesses, and we are finding that the quality and flow of data from hospitality assets to owners is lagging behind the broader real estate sector. Multi-asset owners want a consistent quality of data and a global perspective of their portfolio to allow them to benchmark asset performance. This remains the industry’s biggest challenge, to collect and share high-quality asset-level data to inform long-term ESG strategies and underpin reporting and regulatory compliance. Challenges that lie ahead in the near future include measurement and quantification of the social aspects of ESG and the inclusion of biodiversity into the overall equation.
Fahad Abdulrahim Kazim: The biggest priority for our industry in sustainable development and operations is striking the right balance between exceptional guest experiences and minimizing our environmental footprint. It's crucial to seamlessly integrate sustainable practices into every aspect of our operations while continuing to provide top-notch service and innovative offerings. This approach ensures we meet the growing demands of conscious travellers and contribute meaningfully to a more sustainable future.
Throughout the years, Millennium Hotels and Resorts has undergone impressive transformations to meet the ever-changing needs of our guests and the dynamic hospitality industry. Our focus has revolved around crucial areas to drive our brand forward and ensure continuous success, broadly identified as Sustainability, Technology and People – sustainability in the way we operate, technology to effectively reach our audiences and leverage data analytics and AI to gain valuable insights and improve guest services, and empowering our people, both internally and the communities through strategic training and partnerships.
In 2023, we have a strategic direction for “Year of Quality”, encompassing: Guest experiences and services in line with our localization strategy to launch hospitality schools in the UAE and KSA and attract young local talent to our business, Colleague engagement as an integral corporate strategy for a team that is engaged through training, reward and recognition, and prioritizing wellbeing.
Paul Stevans: Among the key environmental ESG areas, the reduction of greenhouse gas emissions is a priority. From construction to daily operations, Accor is strongly engaged with resolute action to respect the natural limits of our planet and reduce greenhouse gas emissions. We have introduced a number of tools for our hotels and clients, as part of the carbon commitment, including a survey and score card for hotels to build their energy performance and saving opportunities, and a net zero carbon calculator to help Meeting & Event clients calculate the carbon footprint of their event and allow the purchase of carbon credits to balance the remaining emissions.
As part of its commitment to ESG activities, Accor signed the Glasgow Declaration on Climate Action in Tourism launched by the UN World Tourism Organization (UNTWO), setting an ambitious science-based emissions reduction target: -46% absolute emissions by 2030 compared to the 2019 base year and joined the ‘Business Ambition for 1.5°C’ program to limit global warming, making Accor the first international hotel group to make a long-term commitment to achieving net zero emissions by 2050.
Furthermore, our hotels have a long-standing commitment against plastic, which began In 2020, where we began eliminating plastic straws, cotton buds and stirrers. In 2022, 96% of our UAE hotels in the Premium, Midscale & Economy Division eliminated Single Use Plastic from guest facing areas ranging from Food & Beverage, in-room amenities and meeting and events. Today, we are working towards ambitious targets and have added 9 more items to be eliminated from guest facing areas based on the UN GTPI recommendations. The continued efforts in 2023 resulted in 63% of our hotel being compliant (YTD) and we are going a step further with the transformation by monitoring and eliminating back of house single use plastic.. The global objective is for 80% of our hotels to eliminate single use plastic from guest facing areas ( 50+ items) by the end of 2023.
Elie Milky: While all facets of sustainability are essential, the most pressing priority for our industry is the need to address our environmental footprint, given the scale and nature of our operations. This includes reducing carbon emissions, minimizing waste, and conserving resources. As an industry that primarily revolves around physical locations, buildings, and transportation, we have a significant role in driving forward green building practices, efficient energy consumption, and sustainable transportation solutions for our guests. Radisson Hotel Group has a history of responsible business since our first environmental policy in 1989. We aim to be Net Zero by 2050 with science-based targets, focusing on enhancing energy efficiency and transitioning to renewables. We offer our guests carbon-neutral meetings and EV charging networks in India and Europe. Our commitment extends to business ethics, supply chain sustainability, reducing carbon footprints, and supporting employability programs. Beyond our boundaries, we lead industry initiatives like Hotel Sustainability Basics and the Pathway to Net Positive Hospitality.
What are the main challenges our sector faces when it comes to the development and execution of ESG strategy?
Haitham Mattar: A challenge that the hospitality sector faces when developing and executing an ESG strategy is the lack of standardisation. For governments to set ESG targets, industry level standards are pivotal to mandate across different areas of sustainability. As an industry, standardisation is a recurring topic of importance that appears in virtually every conversation, as well as across customer forums. It is the need of the hour for governments, businesses and trade bodies to harmonise efforts and as a result, maintain effective tourism and hospitality ESG standards.
Additionally, through sustainability policies and regulations, we will be better able to enable quicker adoption of new technologies and renovations that allow carbon monitoring and reporting, and other active and passive measures. As an industry, our standardisation efforts yield a two-fold benefit — supporting our customers in assessing hotels with relevant good data, and supporting our hotels by providing clarity into what customers consider most important, with the opportunity to elevate offering.
Richard Williamson: Hotels remain complex environments, incorporating accommodation, restaurants, bars, laundry and more. Ownership is also often multi-layered, with owners (private equity, family offices, asset managers, pension funds), brands (eg Accor, Hilton, Marriott, Hoxton), operators (eg Kerten, Oetker, B&B) as well as management contracts. This complexity means that often no one party has absolute control of the asset and implementing an ESG strategy across diverse portfolios of hotels with multiple stakeholders - with conflicting interests and priorities - can be extremely challenging. An important part of Considerate Group’s work is aligning these diverse stakeholder interests to develop a single, unified ESG strategy, that can be followed by the entire hotel portfolio. Using our direct experience of the complexities of the hospitality industry, we then ensure suitable support to implement the strategy at asset-level. General ESG advisors can only offer so much - the industry needs specialist advisors. As a collaborative sector-partner, Considerate Group identifies and works with best of breed advisors, with our ESG data platform, Con-Serve™, tailored to the needs of the hospitality industry but based on Deepki’s proven real estate data platform. We work with a specialist food waste provider, Foodprint as well as a specialist EU taxonomy platform, Celsia. We also work with a number of energy audit partners in jurisdictions where local partners are required.
Fahad Abdulrahim Kazim: The main challenges faced by the hospitality sector in developing and executing a successful and sustainable ESG strategy are to deliver quality service and support continuously and consistently to guests and employees while keeping the environmental impact at a minimum. Most recently, the industry stakeholders have become increasingly conscious towards incorporating an overarching ESG strategy into every business decision. Nowadays, consumers are placing a great emphasis on environmentally responsible practices. It's no longer just a 'nice to have' credential for hotels and resorts; guests explicitly look for brands prioritising sustainability. This includes energy-saving measures, waste reduction initiatives, using renewable resources, and community and environmental conservation engagement. By incorporating sustainable practices into our operations, we aim to meet the expectations of environmentally conscious guests and contribute to a greener future. In future, we see consumers being even pickier than now while planning their travels as the world gets more transparent. Travellers would want to minimise their carbon emissions and strive for a safe planet for future generations and would like to be associated with companies that positively impact humans as a resource and consumer.
At Millennium Hotels & Resort, we believe in anticipating guest needs and developing our growth plans based on research and future trends. We recognise the significance of sustainability and have incorporated green practices into our operations to meet the expectations of environmentally conscious guests. Moreover, we have embraced technology to provide seamless digital experiences and private, personalised services to cater to our tech-savvy guests.
Our unwavering dedication to delivering exceptional experiences, embracing innovation, and creating lasting value for guests, employees, and stakeholders remains at the core of our vision, and our focus remains to excel in these pillars.
Paul Stevans: The hospitality sector faces intricate challenges when it comes to the development and execution of ESG strategies and deviating from traditional ways of doing things presents is one out of many obstacles. Striking a balance between providing an unwavering guest experience and implementing sustainable practices necessitates innovative solutions. Initiatives like these not only minimize the environmental impact but reduce costs while meeting increasing customer demand for sustainability and hotel environmental data.
Nevertheless, the strategies are not one-size-fits-all solutions, each destination possesses its own unique challenges and opportunities, demanding a customized approach. We ensure our hotels are designed with sustainability in mind from the outset, and we transform and optimize the operations through activities such as waste management, energy and water consumption, eliminating single-use plastics and ensure that our hotels are sourcing food responsibly to preserve biodiversity. 43% of our hotels in the UAE in the Premium, Midscale & Economy Division, have obtained independent third-party sustainability certifications for their sustainable operations with partners such as Green Key and Green Globe, with a global aim of achieving 100% of our hotels being certified by 2026.
As a leader in the field of positive hospitality and a long-term advocate of sustainable development, Accor also places Corporate Social Responsibility at the heart of its overall strategy. The launch of “School For Change”, is an ambitious training program designed to increase employee awareness into sustainable development challenges.
Elie Milky: The development and execution of an ESG strategy in the hospitality sector faces several challenges. The vastness and diversity of the industry make universal solutions difficult, as practices must cater to different regions, cultures, and regulations. There's often a substantial upfront cost for sustainable technologies, making it challenging for smaller properties or those in constrained areas. Changing the behavior patterns of both staff and guests to align with sustainability goals can be complex. Furthermore, accurate data collection for assessing impact needs to be more standardized, complicating progress measurement. Finally, balancing guest expectations for luxury with sustainable practices and ensuring ethical operations throughout our extensive supply chain remain pressing concerns.