Waste reduction a key hospitality focus as consumption rises with tourism’s return: Ascott MD

The hospitality industry will increasingly focus on waste reduction as it grapples with the environmental impact of a rebound in tourism and changing consumer preferences, says CapitaLand Investment’s chief financial and sustainability officer for lodging.

“As the industry rebounds and more travellers stay at different accommodations – whether hotels, serviced residences, or co-living spaces – there will inevitably be more products used,” says Beh Siew Kim, who is also managing director for Vietnam, Cambodia, Myanmar, Japan and Korea at The Ascott.

A sustainability initiative that will gain increasing importance is the circular economy, which aims to minimise waste by maximising the reuse and recycling of materials and products.

“To minimise the environmental impact, hospitality players will leverage waste management and circular economy solutions to achieve a higher recycling rate in day-to-day operations, and eliminate products such as single-use plastics, bathroom amenities and plastic bottles.”

Rising conscious consumerism also means that companies that fail to take sustainability initiatives seriously risk going out of business. “Generation Z has US$360 billion of buying power, and they are concerned about businesses’ efforts to combat climate change,” says Beh.

Another trend is the growing importance of green building and design practices – with energy-efficient buildings, renewable energy sources, and sustainable materials being used to reduce the carbon footprint of hotels.

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Beh also expects that a more concerted effort will be put into accelerating the green transition, in Singapore in particular. “Private-public partnerships will become critical in promoting knowledge sharing and best practices across the industry. These will be especially important as the sustainability landscape evolves quickly and travel continues to rebound strongly.”

Changing tastes

The emphasis on sustainability will also pay off in resonating with the rising segment of consumers who are paying attention to the environmental impact of their decisions, Beh says.

She cites the recent Sustainable Travel Consumer Report by Trip.com, which suggested that travellers are increasingly looking for sustainable tourism. Three-quarters – 75 per cent – of the 7,705 respondents from Asia and Europe said they are considering travelling more sustainably in the future, while almost 60 per cent have chosen more sustainable travel options in the past few years.

Consumers are not only more environmentally conscious, but also better informed. Industry players are now expected to back their sustainability claims and net-zero emissions targets with data insights and metrics, and provide frequent updates on their progress and milestones achieved. 

But companies will fail at executing their sustainability vision if they try to go it alone, Beh says.

“It requires the cooperation and understanding of all stakeholders involved,” she says. “Operators should consistently engage with stakeholders, including owners, guests, clients and partners, to educate and share necessary insights and data, in order to drive a collaborative and well-informed ESG strategy.”

This is especially the case when misconceptions about sustainability efforts and worries about greenwashing remain. 

One of the biggest gaps in understanding, for example, exists in investors’ comprehension of the true value of sustainability in properties.

“A common misconception they might have centres around the cost involved in greening a property and whether good financial returns will follow,” Beh says. “In actuality, green buildings may command a price premium and enjoy higher occupancy rates as more guests look for sustainable options. Going green could present cost benefits for hospitality players, and these include practices such as the management of energy and water consumption.”

Technology has also advanced significantly over the years, helping to reduce the costs of greening buildings. With government support and subsidies, alongside savings arising from energy efficiency, a positive return on investment can be achieved, she adds.

Getting it right

To effectively embrace sustainability objectives and make them work within the larger context of the business, companies need to realise that profitability and sustainability complement rather than compete with each other.

“Being sustainable doesn’t necessarily entail making financial sacrifices,” Beh says. “In fact, industry players might lose their competitive advantage if they are not aligned with consumer expectations on sustainability.”

She says there is a growing belief within the owner and investor community that a company’s environmental, social and governance performance go hand in hand with financial returns, and that companies should pursue sustainability with a view of creating value for the company.

Institutional capital is also increasingly favouring sustainable business practices, she adds. Companies with a portfolio that achieve sustainability performance targets can access green financing, which can potentially present further savings in financing cost and improve overall profitability.

“We embrace sustainability because we want to create growth and resilience in the business today and beyond,” Beh says. “Companies should look to incorporating sustainability throughout all aspects of the business instead of regarding it as an afterthought. It begins with a mindset shift among the leaders as they take the charge of leading the organisation on the journey.”

She adds that it is also important to acknowledge that being sustainable goes beyond environmental management and includes areas like governance and social development. 

“In the long-run, becoming sustainable will propel brands to the global stage, enhance their reputation and market value. All of these will inherently raise the competitiveness of hospitality players.

“The bottom line is clear, hospitality players need to become green or risk lagging in a dynamic market.”