The COVID-19 pandemic has exacerbated systemic weaknesses, inequalities, and unacceptable practices throughout global value chains in many industries, including the tourism industry. In this context, the hospitality industry is facing numerous challenges such as the constant changes in travel restrictions which vary by country and the associated uncertainty for recovery which leads to revenue loss, reduced occupancy, or the closing of properties altogether. Post-pandemic workforce labour conditions and access to talent are also a concern.
Environmental and social issues are now a priority in corporate agendas as a result of industry investors and consumer pressure. The three main areas driving this shift include: 1) Focus on materiality: Increased recognition that ESG (Environment, Social, and Governance) factors can affect risk and returns.
2) Client demand: Growing pressure from clients for greater transparency about how their money is invested and 3) Regulation: Guidance from regulators on investors’ fiduciary duty on ESG factors. In fact, regulations like the EU Taxonomy, SFDR, and the new CSRD, as well as the Modern Slavery Act in the UK are very relevant for the hospitality industry. To help the industry get ready for these regulatory requirements, the ESHClub has developed the Hospitality Impact Investing Initiative (HII) in order to create a hospitality industry-specific ESG framework. As part of HII we have established a range of impact measurement practices and metrics to support smart investment strategies from hospitality asset owners and operators.
The lack of standardisation in international reporting standards remains a challenge for companies in this industry. SMEs or family-owned businesses struggle to understand the complexity of the current reporting requirements and how to meet all the resource-intensive reporting requirements. Furthermore, the existing multi-certification scenario in the sustainable tourism sphere is overwhelming and C-Suite leaders’ are at a loss to understand which one is more suitable for their companies. I often advise companies to opt for systemic certifications like the B-Corp, which involves a 360-degree business assessment. On the other hand, micro-certifications like ISOs (e.g 14001, 50001, 27000), LEED, or BREEAM are also helpful as they can support sustainability strategies. In this context, we advise engaging with companies such as the Corporate Equality Index to assess and benchmark a hotel’s social performance.