The ROI of ESG in Hospitality
The hospitality industry thrives on providing experiences, but today’s most successful hotels and resorts prove that sustainability isn’t just good for the planet. It’s a game-changer for the bottom line. Gone are the days when ESG (Environmental, Social, and Governance) initiatives were viewed as a “nice-to-have.”
The hospitality industry thrives on providing experiences, but today’s most successful hotels and resorts prove that sustainability isn’t just good for the planet. It’s a game-changer for the bottom line. Gone are the days when ESG (Environmental, Social, and Governance) initiatives were viewed as a “nice-to-have.”
Data-driven insights show that sustainable practices directly impact profitability, asset value, and investor appeal. From energy efficiency slashing operational costs to social impact measures supporting longer staff retention to ESG-certified properties commanding higher valuations, the financial returns of going green are impossible to ignore.
However, many businesses face the challenge of quantifying and comparing ESG performance to align their current state with their future ambitions. By adopting data-driven frameworks, hospitality brands can benchmark progress, identify financial benefits, and make informed decisions that translate sustainability into tangible business value.
Profitability Through ESG Initiatives
Data increasingly backs the financial benefits of ESG integration. A study from Penn State School of Hospitality Management, analyzing 166 hospitality firms across 36 countries, found that companies with higher ESG scores, especially in high-income nations, saw more significant financial gains. This suggests that sustainable practices such as energy efficiency, waste reduction, and responsible sourcing directly contribute to improved economic performance.
Hotels that leverage data-driven ESG benchmarking tools can track their cost savings and revenue growth over time. For example, energy efficiency upgrades, such as smart lighting and HVAC optimization, can reduce operational expenses by up to 30%, improving margins and competitiveness. In the UK, total utility costs per available room rose by 83% between 2019 and 2023, making ESG-driven efficiency a necessity rather than a choice.
Enhancing Asset Value
ESG initiatives don’t just reduce costs, they also enhance the long-term value of hospitality assets. Retrofitting properties to meet sustainability standards mitigates risks associated with climate change, regulatory shifts, and changing consumer expectations. Hotels integrating renewable energy sources, advanced waste management, and water conservation measures often see increased property valuations and stronger investor demand. Additionally, a strong social and governance strategy, such as fair labour practices, community engagement, and robust corporate governance, further enhances a property’s appeal by reducing reputational risks, improving brand loyalty, and ensuring compliance with evolving regulations. Investors and asset managers increasingly recognise that properties with high ESG performance are not only more resilient to external risks but also better positioned for long-term growth and profitability
Attracting Investment
Data-driven ESG frameworks, such as FuturePlus, allow businesses to compare their asset performance against industry benchmarks, ensuring that sustainability efforts are aligned with long-term financial returns. As the market shifts, investors and asset managers are increasingly factoring ESG scores into their valuation models, reinforcing the economic upside of sustainable transformation. A recent survey found that 53% of hospitality investors consider ESG due diligence critical, moving beyond a simple compliance exercise. More significantly, 55% of investors are willing to pay a premium for hotels on a verified Net Zero Carbon 2050 pathway.
By leveraging a data-driven comparable ESG assessment, such as FuturePlus, hospitality businesses can provide transparent, comparable data that strengthens their position in investment negotiations. Studies of publicly traded hospitality firms across 16 countries from 2005 to 2022 reveal that higher ESG ratings correlate with improved corporate financial performance, including return on assets and equity. As noted in this study, this effect was notably stronger in the United States and during the COVID-19 pandemic, indicating that robust ESG practices can enhance resilience during periods of crisis.
Conclusion
The ROI of ESG in hospitality is no longer a question—it’s a measurable reality. With the right data-driven frameworks, hotels and resorts can:
- Benchmark their sustainability performance against industry peers.
- Align their current ESG state with future business goals.
- Quantify the financial impact of sustainable investments.
By integrating ESG in a way that is both comparable and actionable, hospitality businesses can ensure that sustainability is more than a moral imperative but a long-term strategy for profitability, resilience, and growth.
This article is brought to you through a collaboration between Horwath HTL and FuturePlus.
How Horwath HTL and FuturePlus Can Help
FuturePlus empowers hospitality businesses to manage, measure, and improve their ESG performance using a data-driven, accessible framework. Unlike static ESG ratings, FuturePlus provides a dynamic, forward-looking assessment that evaluates a company’s sustainability performance and future ambitions.
Through its partnership with Horwath HTL, the world’s leading hospitality, tourism, and leisure consultancy, FuturePlus helps businesses in the hospitality sector align sustainability with financial success. This collaboration ensures that hospitality brands quantify and track their ESG performance and integrate sustainability into asset valuation, investment strategies, and operational efficiencies. By combining FuturePlus’ innovative ESG platform with Horwath HTL’s deep industry expertise, this partnership gives the hospitality sector the tools and insights needed to turn sustainability into a competitive advantage.
If you would like more information regarding how Horwath HTL and FuturePlus can support your sustainability ambitions, please contact us at – [email protected]
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