Hotels are 10 years behind offices on ESG

Hotels ESG

Tim Wheeldon (left), Amy Nelson-Bennett (middle), Rekha Toora (right)

UK: International Hospitality Media (IHM) held its latest Urban Living Insights: Hotels and Hospitality event last week at the Sheraton Grand Park Lane in London, sponsored by Hubbl.

Urban Living Insights are half-day, morning events which focus on specific asset classes and sectors across the hospitality and operational real estate industries.

Last week, the focus was on hotels and hospitality. Operators, developers, investors, architects and designers joined IHM’s editorial team George Sell (editor-in-chief) and Eloise Hanson (editor – hospitality, Boutique Hotel News) to learn more about current trends and challenges. 

The morning started with an insightful overview of the investment and finance landscape by Tom Oakden, managing director of Hilltop Hospitality Advisors. He highlighted that the main challenges to the hotel sector are a result of inflationary pressures on the cost of refinancing. With these factors at play, he predicts 2024 will see more hotel sales. 

Regarding sales, standalone trophy assets in Europe such as Westin Place Vendome, Paris (purchased by Dubai Holding), Mandarin Oriental Barcelona (purchased by Olayan Group), and Custom House London (for conversion to hotel, purchased by Jastar Capital) were some notable recent acquisitions. Resorts have seen increased investor appetite, representing around 29 per cent of Q1 to Q3 European transactions which historically would sit around 10 per cent. 

Sell then hosted a panel discussion on the squeezed middle, which explored the opportunities for middle tier hotels to capture greater demand. 

Deepesh Thakrar, senior director – debt finance of OakNorth Bank, believed there was vast potential in the staycation market for middle tier, family affordable hotels. Thomas Greenall, CEO of Bespoke Hotels, agreed. He added that in regional areas where independent hotels are typically found, herein lies the opportunity for mid-scale properties – something which Accor is exploring. 

Georgina Liggins, development director for the UK & Ireland, explained that Accor is providing greater flexibility for independent, mid-scale owners with the launch of its soft brand Handwritten Collection earlier this year. All of which was supported by commentary from Fiona Von-Hinten, associate director at BVA BDRC, who highlighted a growing consumer trust in brands.

The final session of the morning covered measuring sustainability. Tim Wheeldon, managing director of Zeal Hotels remarked that “the hotel market is 10 years behind offices on its ESG journey” and explained that the company is relying on the CRREM Pathway to track and report on its decarbonisation efforts. 

Rekha Toora, EMEA hotel capital markets from JLL stressed that whilst ESG frameworks and accreditations are important to investors, there is much greater focus on EPC ratings. For commercial properties such as hotels, an EPC rating of C or higher will become law by April 2027, and this will increase to an EPC B rating by 2030. Amy Nelson-Bennett, CEO of Positive Luxury, added that simple, smart changes within businesses often lead to noticeable reductions in energy and waste, and encouraged hoteliers to start small before tackling larger-scale operations.

Urban Living Insights will return in February 2024 with an event on coliving. If you’re interested in working with us, please get in touch with VP commercial partnerships – living, Henry Fuller at henry@internationalhospitality.media.

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