By Tim Weiss
Embracing sustainability is imperative to hotels as the world adapts to the low-carbon economy. About 90% of travelers look for sustainable accommodations, investors want to know a business’s long-term viability, and local and federal governments increasingly require environmental reporting and credible paths to decarbonization. Hotels must respond to this pressure by measuring and reducing their carbon emissions.
Environmental sustainability translates to better business performance. Hotels that signed the UNESCO Sustainable Travel Pledge saw a nearly 25% increase in week-over-week bookings in 2022, compared to a 15% increase for non-pledged hotels.
Hotels produce about 1% of global carbon emissions annually — the equivalent of nearly 46 million homes. Electricity usage accounts for a significant portion of that output. When hotel operators and chains own their hotel properties, electricity usage in these locations is classified as scope 2 emissions. However, the energy used at franchised locations qualifies as scope 3 emissions, along with other indirect emissions like purchased goods, that don’t fall under direct control of the hotel brand. Both scope 2 and scope 3 emissions are critical to understand and reduce as hospitality organizations look to compete in a more sustainability-oriented economy.
As the importance of climate reporting grows, companies can follow these strategies to quantify and shrink their climate impact.
Addressing scope 2 emissions
Calculating scope 2 emissions can be relatively straightforward. Multiplying a hotel’s energy consumption by location- or market-based emissions factors gives you the equivalent greenhouse gas (GHG) output. But calculations are just the start – hotels must go beyond to take meaningful action to reduce those emissions.
These five steps can help you reduce your scope 2 emissions.
- Identify priorities.
Identify the locations and processes with the largest emissions and energy costs. Prioritize making changes in these locations first.
- Optimize for efficiency
In high-emitting locations or new hotel designs, make straightforward efficiency upgrades, such as switching to energy-efficient lighting, implementing smart thermostat controls and conducting proactive maintenance on electricity-consuming equipment. These actions will deliver immediate results.
- Strategically implement renewable energy.
There are many ways to procure renewable energy: onsite solar, power purchase agreements (PPAs), utility green tariffs and renewable energy credits. Each has pros and cons and varying levels of impact on your long-term decarbonization strategy. Consider which options are available and which actually support objectives. Check with your utility providers to see if they offer green power plans. Larger organizations might look into Power Purchase Agreements (PPAs), which allow them to purchase renewable energy from an offsite power generator. You could also install renewable energy within your operations, like onsite solar.
- Plan for efficiency upgrades.
Identify large equipment (like HVAC and large-scale laundry) due for replacement in the next few years and budget to replace them with more energy-efficient devices.
- Consider renewable energy certificates.
In places where green energy is not accessible, consider investing in renewable energy certificates, which provide funding for renewable energy assets. While not a long-term solution, this approach contributes to the overall infrastructure in your market while you build longer-term reduction plans.
Reducing scope 3 emissions
More and more, hotel chains are moving to a franchise model. Because the corporation does not control these hotels’ operations, the emissions associated with energy usage at these locations fall under scope 3. Effectively measuring and meaningfully reducing these impacts requires collaboration with franchise owners to collect hotel-level data and identify reduction opportunities.
Large hotel chains may find collecting primary emissions data daunting, so start small. Use your operational data and hospitality industry benchmarks to pinpoint the locations likely creating the most significant emissions. These sources may include highly trafficked hotels, facilities on a fossil-fuel-dependent energy grid, or older, less efficient buildings. These entities present the greatest opportunities for carbon reduction and should be the first targets for data collection and collaboration.
Armed with specific emissions data, you can implement targeted plans to lower carbon output. You could work with your franchisees to:
- Invest in energy-efficient equipment.
- Adopt renewable energy.
- Change laundry processes.
- Source supplies locally.
Government regulations
Pending government regulations will make detailed climate reporting obligatory. Under California’s Climate Corporate Data Accountability Act, companies with over $1 billion in annual revenue operating in California must report and verify their scope 1, 2 and 3 greenhouse gas emissions. The state has nearly 20,000 hotels, so the impact on the hospitality industry will be significant.
The U.S. Securities and Exchange Commission will likely release similar requirements in 2024. As a result, even more hotel companies — and franchises — will be compelled to report their carbon emissions.
Many local and state governments across the US are implementing building performance standards that require commercial buildings to reduce energy use and greenhouse gas emissions. These expectations might necessitate swifter action in certain locations.
Proactively gathering data now will allow hotels to understand the greatest risks in their value chain, implement reduction programs, and prepare for reporting compliance. While decarbonizing the global hospitality chain is a monumental task, each step makes a difference. These changes must be made now.
