ESG transformation in hospitality industry

The current trends in the global hospitality industry development show the increasing popularity of environmentally friendly accommodations. Tourists more often pick such hotels and are willing to pay more for eco products and services. Thus, the development of ESG — Environmental, Social, and Corporate Governance — in the hotel sector is becoming more relevant.

While analyzing the global experience of ESG development, we can see the increased use of energy efficient technologies and the introduction of environmental standards in hotels and other accommodations.

A hotel’s compliance with the requirements is proved by the ISO 14001 certification for Environmental Management Systems developed by the International Organization for Standardization. The organization has to adopt a special policy to protect the environment. There is also the Leadership in Energy and Environmental Design (LEED) certification system for eco-hotels with environmentally friendly designs. Such organizations as the Certification for Sustainable Tourism (CST), Green Key, Green Globe and others are engaged in the development and introduction of environmental management systems.

The preparation of a hotel for certification and the introduction of relevant organizational, technical and technology decisions is a lengthy and expensive process. Here are some of the required development directions:

use of green construction technologies;
introduction of the energy management system focused on energy cost optimization;
introduction of green vehicles for hotels and accommodations;
introduction of green marketing as well as work with suppliers of eco products.

Experience shows that the payback period of such measures in Russia can reach 5-7 years. The developer’s additional certification costs comprise 2%-5% of the total construction cost. Therefore, many hotels that are not a part of hotel networks need more support in the introduction of green technologies. In Russia, with its vast prospects for hospitality and tourism industry — in particularly, eco-tourism — the use of green technologies could facilitate the sector’s advancement.

Chart 1: Green technologies at Russian hotels

Hotel	Location	Number of rooms
Meridian Hotel	Samara	23
Rakurs Hotel	Ulyanovsk	36
Hotel Nogai	Kazan	167
Park Inn by Radisson	Yekaterinburg	160
Cronwell Inn Tursunt	Khanty-Mansi Autonomous Area	32
ParkInnbyRadisson	Novosibirsk	150
Park Inn by Radisson	Novokuznetsk	174
Radisson Blu Sheremetyevo	Moscow	391
Radisson Resort, Zavidovo	Moscow	239
SoloSokos Hotel Vasilievsky	St. Petersburg	255
Park Inn by Radisson Pulkovskaya	St. Petersburg	842
Park Inn by Radisson Pulkovo Airport	St. Petersburg	200
Original Sokos Hotel Olympia Garden	St. Petersburg	348
Park Inn by Radisson Pribaltiyskaya	St. Petersburg	1,184
Solo Sokos Hotel Palace Bridge	St. Petersburg	324
Radisson Sonya	St. Petersburg	173
Radisson Royal Hotel	St. Petersburg	164
Cronwell Inn Stremyannaya Hotel	St. Petersburg	49
Park Inn by Radisson Nevsky	St. Petersburg	269
Park Inn by Radisson Poliarnie Zori	Murmansk	262
RODINA Grand Hotel & SPA	Sochi	60
Radisson Blu Resort & Congress Centre	Sochi	508
Radisson Collection Paradise Resort & Spa	Sochi	516
Radisson Rosa Khutor	Sochi	181

As shown by the experience of Russian hotels that use green technologies, their implementation provides hotel enterprises with obvious advantages. Overall energy savings in heating, ventilation and air conditioning reduce energy costs by 40–60%, while water consumption could be reduced by 30%.

At the current stage of green technology development in Russia, large hotels located in metropolitan areas are playing the lead in this regard. Another area of development of eco-hotels, which are not very common so far, includes small hotels at locations with a relatively small number of tourists.

A greater use of green technologies in Russia’s hospitality industry is being hindered by such factors as long payback periods for green building projects, as well as complicated administrative procedures and insufficient activity of related organizations. Figure 1 shows an example of interaction between a hotel and administrative structures for green building certification.

	HOTEL DEVELOPER ↓
CONSULTING COMPANY	← CERTIFIED ORGANIZATION → ↓	TESTING LABORATORY
GREEN BUILDING COUNCIL NON-PROFIT ORGANIZATION	CENTER FOR ENVIRONMENTAL CERTIFICATION NON-PROFIT ORGANIZATION ↓	APPEAL BOARD
	CENTER FOR TRAINING AND CERTIFICATION OF SYSTEM EXPERTS ↓
	RELATIED CERTIFIED CENTERS

Figure 1: Operational structure of Russia’s Eco Standards existing system for voluntary certification

Administrative structures include: Green Building Council non-profit organization of Russia’s Union of Architects and Green Standards Center for Environmental Certification of the Russian Ministry of Natural Resources and Environment. The second group features organizations that promote LEED and BREEAM voluntary certification systems: Russian Green Building Council (RuGBC), Skolkovo innovations center, and State Corporation Olympstroy.

The Eco Standards certification system was created to minimize the negative impact of real estate facilities on the environment, introduce technologies for energy efficiency and resource saving, and improve comfort of living. Its aim is to ensure environmental safety of real property both during construction and operational stages and the rational use of natural resources, as well as to help customers wisely choose real estate property.

The adopted Eco Standards system includes 13 sections. A building is evaluated by the following parameters: pollution prevention, land plot choice, wastewater discharge regulation, rational water and energy use, safety of construction materials and their recycling, facility infrastructure, development of surrounding ladscape, indoor environment quality and comfort, and others.

Interestingly, although Russian standards have much in common with regulations effective in other countries, many parameters are still unique, particularly as regards heat supply. All criteria were developed with due consideration of Russia’s environment as well as the necessity to bring domestic regulations into compliance with international standards. The criteria can be applied to new and existing buildings; they are relevant for various types of structures: office, retail, residential and industrial buildings.

Eco standards also offer other advantages to owners, investors and developers, with the use of green technologies in construction considerably boosting facility competitiveness.