The hospitality sector is giving ESG the five star treatment to win over clients and prove their credentials.
The Energy & Environment Alliance (EEA) has released a new report, highlighting the increasing role of Environmental, Social and Governance (ESG) considerations in shaping hotel investment strategies.
Based on interviews with investors managing over $360 billion (£280bn) in hotel assets, the findings reveal a growing emphasis on sustainability, energy efficiency and regulatory compliance.
It found the following trends across the board…
Energy efficiency
With rising energy costs and stricter regulations, investors are prioritising energy efficiency as a core ESG concern.
Transactions & finance
While ESG’s direct impact on hotel exit valuations is still evolving, it is already affecting liquidity and investment decisions. Institutional investors and private equity firms are increasingly focusing on decarbonisation pathways for assets.
Engagement from investors
Institutional investors have embedded ESG due diligence into underwriting processes, while private equity firms are catching up. Owner-operators and high-net-worth individuals (HNWIs) show inconsistent levels of ESG adoption, though standout examples are attracting private equity interest.
Banks & lenders driving change
Sustainable finance is rising, with banks incorporating ESG factors into loan terms. While green bonds and sustainability-linked loans are growing, access remains limited in some regions.
Corporate customers demanding more
ESG credentials are influencing corporate travel decisions, although consumer willingness to pay a premium remains unclear.
Rekha Toora, Chair of the EEA Capital Markets Committee and Senior Vice President, Jones Lang LaSalle, Hotels and Hospitality commented: “Although the hospitality sector is at a nascent point compared to other sectors, ESG considerations are growing in importance and starting to shape asset management and pricing decisions amongst the large players. We expect to see an increase in transactions and greater focus on ESG credentials.”
