Our Thoughts
Tue, 31/05/2022 - 12:00
· 3 min read

Want Investment To Check In? Green Your Hotel Asset Or Risk Check Out

There is a new generation of players entering the hotels market in hot pursuit of the headwinds following the rise of the staycation. For them, the level of capital expenditure required to bring an asset’s environmental credentials up to an investable, purchasable or leasable standard can mean the stark difference between them very quickly ‘checking in’ or ‘checking out’ from discussions.

Recently, we’ve seen Mayfair Capital acquire a net-zero Premier Inn hotel in Leeds from Town Centre Securities for £16m and Lamington Group launch the world’s first fully net zero carbon hotel in West London. For investors such as these, acquiring or developing an asset with minimal or low environmental impact in today’s landscape is imperative and, of course, makes the returns all the more significant, but just how do you prepare your asset to be sustainable enough for the investment eye?

Well, the scale of the challenge faced is enough to warrant a ‘do not disturb’ sign. According to the EEA, there has been a 49% increase in energy usage in the accommodation sector globally since 2000 and over 3.1bn kg of CO2 is produced annually from the sector. Our research found that almost half of UK hotels are more than 15 years old, and around 40% are over 20 years old. Independent hotels, accounting for 40% of total hotel rooms in the UK, are older still. Many of these assets run the risk of becoming obsolete and ‘uninvestable’ if action is not taken. 

Quick operational wins

Thankfully, for those operational hotel assets, there are a few quick wins, which can support your credentials and demonstrate value to a perspective investor.

Firstly, by implementing measurement systems to track environmental impact, you can set targets with a clear roadmap to meet them. Demonstrating to an investor a clear record of you actively reducing impact can positively affect your discussions. Evidence is key here – investors will want to see an end goal. 

Then there is the deriving of energy from renewable sources, such as solar panels, and investing in room occupancy sensors for energy efficient lighting and heating too. Water usage, preservation and recycling is an added consideration, with fit low flow technologies, rainwater collection, and wastewater treatment systems also providing an investment boost.

Finally, the circular economy and supply chain sustainability should also be considered i.e how each element within a hotel could be reused, recycled, repurposed, from furnishings to food waste. Sourcing furniture, food, and general suppliers from the local community can reduce the carbon footprint that those goods have to travel, enhancing credentials in the process.

Legislation driving change

The Energy & Environment Alliance (EEA) is facilitating within the sector to make changes. Aside from enabling members to source their energy at a low cost and carbon free, the BREEAM in Use for the Hospitality industry (BiUH) being developed by EEA and BREEAM will act as a major support for the industry, aligning its construction and refurbishment standards for hotels with BiUH. In providing benchmarking and performance analysis, it can help hotel owners understand the changes that must be made to their properties to bring them up to required standards.

From an operational perspective, Green Tourism is helping to promote greener ways for businesses to operate. Their awards certification acknowledge good environmentally-friendly practices, acting as a hallmark of 'green quality'. Key areas they provide advice on include reducing energy use, saving water, efficient and eco-friendly waste disposal, ethical buying, using local goods, minimising food miles, promoting biodiversity, and adopting a smart, sustainable outlook.

As time goes on consumers will demand more from the hotel accommodation they choose to stay in and those who do not meet necessary standards will lose out. This was reflected in the latest Booking.com Sustainable Travel Report 2021, which noted that 83% of global travellers think sustainable travel is vital, with 61% saying the pandemic has made them want to travel more sustainably in the future.

In some cases the steps needed to reach the end goal may result in high costs but the reward will ultimately compensate in a world where ESG concerns are a top priority for all.

Want Investment To Check In? Green Your Hotel Asset Or Risk Check Out