ESG and hospitality

The impact of sustainability in the hospitality sector

The Sustainable Innovation Desk was responsible for conducting research designed to understand how the hospitality sector is evolving toward greater sustainability. This dynamic appears to be driven not only by operators, but also by consumers who are increasingly incentivized to seek solutions that meet sustainability requirements.

Sustainability is permeating various human activities, establishing itself as a focal aspect of the decision-making process of individuals and companies. Given its impact on surrounding communities and the environment, the hospitality sector has been heavily influenced by the growing demand for sustainable practices.

According to the Cambridge Institute for Sustainability Leadership, tourism is now responsible for 10 percent of global greenhouse gas emissions and this figure is expected to increase by 130 percent by 2035. Furthermore, the International Tourism Partnership has noted that the hotel industry, in order to comply with the Paris Climate Agreement, would have to reduce greenhouse gas emissions by 90 percent by 2050.

Given this evidence, consumers also appear to be increasingly sensitive to this issue: 76 percent of consumers express a desire to travel more sustainably, and 43 percent say they are willing to pay more for travel options with a sustainable certification.

As consumers and investors pressure the hospitality industry to become more sustainable, an increasing number of operators are changing their traditional approach to integrate more sustainable practices into their business models. To prove the implementation of good practices, operators often apply for internationally recognized certifications such as BREEAM or LEEDn.

Background: the significance of the hospitality industry and its impact

Tourism and travel is an extremely relevant business, not only internationally, but also domestically.

Post-pandemic, the sector not only has recovered, but also has demonstrated extraordinary growth.

In the first five months of 2022, international tourism doubled (+130%) compared to the same period in 2021, and the first seven months of 2023 saw a +19% increase over the previous year.

In Italy, in 2022, the tourism sector recorded revenues of just under 200 billion (US $197 billion), accounting for 9.4% of national GDP. From an employment perspective, it employs 2.9 million people, accounting for 12.5 percent of the national total.

Looking at the data, it can be said that tourism is a significant source of employment involving thousands of people and companies. The sector is closely linked to the social, economic and environmental well-being of many countries, particularly developing countries as they have become attractive destinations in recent years.

These dynamics have consolidated the sector as one of the world’s leading economic drivers and as a primary contributor towards the impact of climate change.

In recent years, sustainability has become a central topic not only for institutions, but also for individuals who have been incorporating more sustainable practices in everyday life.

Sustainability is, therefore, not just a “fashion or a fad,” but constitutes the increasingly profound realization that every action has a direct impact on the planet.

Given this approach, it is clear how the hospitality sector cannot exempt itself from new sustainable dynamics.

This is also demonstrated by the data.

Overall, Travel & Tourism (T&T) is the sector responsible for about 10 percent of global CO2 emissions, which, if businesses take no action, will increase by 5 percent each year and reach 8.4 gigatonnes of CO2 emissions in 2030. Highlighting this dynamic is BCG’s study “Steering Consumers to Greener Travel and Tourism Choices,” which is based on research involving 19,000 consumers from eight countries. This shows that more than 40 percent of the industry’s emissions are determined by consumer choices (such as lodging, destination, means of transportation, etc.), and that 80 percent of these  consumer say they are concerned about the environment.

Given these data points, it becomes clear how making the sector increasingly sustainable is crucial for companies that must, therefore, direct consumers toward more conscious choices.

In addition, the International Tourism Partnership found that in order to comply with the Paris Climate Agreement, the hotel industry should commit to reducing greenhouse gas emissions by 90 percent by 2050 (based on 2010 benchmarks).