The sector was starting to see tangible support for taking the required steps to becoming more sustainable, attendees at the THREG meeting, hosted by Avison Young, heard this week, which is good news for those of us who thought it was going to be all stick and no greenhouse carrot.
Andrew Porter, business development director, Coutts, told the assembled: “Commercial has been very late to come to the party, but yes, we have a green loan in the pipeline and it will be more favourable.” The pipeline of spewing out next year, attendees were pleased to hear.
Cheering him up was the idea that there would be a “pricing premium for green hotels”, something which had been mentioned earlier in the session by Ufi Ibrahim, CEO, Energy and Environment Alliance, who commented that “the minds of capital and the lenders are focused on the risk of stranded assets” and that, “corporate travel customers are demanding ESG credentials for the hotels their executives are staying in. Hotel assets are valued on cashflow. So customers, through their demands, are having an impact on values”.
It can’t really be clearer and the clarity which is provoking this is what Ibrahim described as “pressure evolving from the streets to the courts”. It’s the law, kids, and no-one wants an illegal hotel. This is not a questionable sharing platform, after all.
Once you get the numbers people involved, you will discover that numbers beget numbers. And with greenwashing bringing in hefty fines – VW take a bow – there is growing pressure on from corporates to, Ibrahim said, “see the data – and they want it independently validated”. There’s just no trust any more.
Tim Wheeldon, managing director, Zeal Hotels, who is going through planning with a sustainable hotel near Exeter and forecast the green loan, tutored the meeting in what is likely to become the sector’s latest favourite KPI, EUI: energy use intensity.
Wheeldon had a handy graph which counted down to the net zero target, illustrating where hotels should be and it garnered a respectful hush in the room. Porter gave it the bank’s seal of approval, adding: “We’ve been lacking as to what good looks like. The EUI is a more focused approach”.
Wheeldon expanded: “We have to achieve these targets. There will be costs involved. But you also have to consider your value. It’s really, really important to do something now.”
This was, Ibrahim pointed out, particularly pressing for the hotel sector, which ranked next to mining in terms of being just dandy for the environment.
Wheeldon echoed Ibrahim, pointing out that ESG was now the first question asked when corporates were booking. As for working out what best to do to bring your hotel in line with the timetable, start with what your Dad was telling you in the 1970s and think insulation.
Wheeldon said: “It’s all about insulation between rooms and the external walls. It’s about taking in and retaining heat in the winter, then cooling the hotel in the summer. It will cost us more to cool the hotel.”
He cautioned: “You cannot build a hotel without carbon unless you’re building a mud hotel with rain water. We’ve got rid of as much steel and concrete as possible.” The cost of the Exeter hotel was around 15% more than average build, but there was evidence that people would pay a premium to stay in a sustainable hotel.
With Zeal’s Exeter project putting it 20 years ahead of much of the rest of the sector, attention turned to existing hotels, where there were challenges aplenty. Ibrahim said: “We start with no capex – behavioural changes – where you can save 15% – you can take than to 40% with low capex, such as changing lightbulbs.”
Ben Tilston, director, design, IHG, said that the group had been experimenting on its managed and leased estate and had developed a piece of software which offered 20 different ways to be more sustainable – including costings. As with Ufi’s suggestions, he pointed out that there were simple leaps to be made, commenting: “In the luxury sector you have shower heads that run at 33litres/minute, which is madness – you can get the same experience with nine”.
As ever with our world of capitalism, it takes the money people to make the real change happen and the government prefers it that way – much less chance of bricks through the window. The gathering was pleased to be educated, but it’s hotel-land – what they really like is a new KPI. And now we have one we can turn into value, it’s looking good for action.