How ESG is Driving Hotel Sustainability
RFPs demand it, guests seek it, investors prioritize it, and the planet needs it. The hotel industry is at a crossroads, requiring sustainable design and operations in order to future-proof assets.
A Hilton study of 72,000 guests reports that 1/3 guests research a hotel’s environmental and social practices before booking. (Source: Forbes) | Image: Hotel Marcel, the first net-zero energy hotel in the U.S | Photographer: Seamus Payne
Demand Drivers
Environmental, Social, Governance (ESG) is reshaping the hospitality landscape.
A 2022 CBRE study revealed that 70% of U.S investors have adopted ESG criteria, and another 10% plan to do so over the next 3-5 years.
This shift is a clear signal: sustainability is a business imperative.
Environmental
Guests are increasingly seeking eco-conscious brands and spaces
Local communities are concerned with air pollution, drought, construction noise, wildlife protection, and light pollution
Owners and operators benefit from efficiency gains with reduced energy and water consumption
Social
Increase in health and wellness lifestyle
Rise of diversity, equity, and inclusion (DEI) programs
Reputation management: stakeholders are holding companies to responsible standards
Governance
Regulatory compliance
Strong investor appetite for ESG disclosures to support assessing companies with non-financial performance
Opportunity cost of not doing anything
Article: Climate Risk and Resilience: What Developers Need to Know →
“From a shareholder return perspective, a lot of ESG policies are about risk mitigation and future-proofing your investment, so being aware of regulations and changes coming and making those changes in advance helps support your investment. It’s also related to access to capital. European capital providers want this.”
— Marissa Ballan, vice president of global investment management for CitizenM Hotels (Source: Costar)
JARGON
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The concept of "green building" began to formalize in the 1990s to describe buildings designed and constructed with environmental considerations and sustainability in mind.
In 1993, the formation of the U.S. Green Building Council (USGBC) significantly popularized the term "green building." USGBC created and manages the LEED certification program.
While green building and sustainable building are often used interchangeably, many professionals feel that green represents doing less bad and fails to highlight human health and wellbeing, which are crucial for achieving true sustainability.
The International Living Future Institute has revised the parameters of green building in this chart.
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In business, ‘sustainability’ is a broad term encompassing practices that prioritize environmental and social responsibility. The concept often centers on reducing emissions primarily through energy and water usage and cutting down waste, which all aim to conserve natural resources.
Yet, to be truly sustainable requires inputs that are greater or equal to outputs. That’s a lofty aspiration given the current state of human activity.
Particularly in real estate development and hotel operations, the challenge is evident. This sector is inherently extractive, marked by high consumption of resources and products.To align with sustainability goals, there's a pressing need to not just minimize this impact, but to implement practices that reverse and regenerate depleted resources.
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Regenerative practices is a shift from doing less harm to restoring the natural environment and surrounding communities.
Regeneration is a process that only happens in Living Systems. It requires us to learn to see and work with life as living.
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ESG stands for environmental, social and governance. These are the 3 pillars in global ESG frameworks which companies are expected to report on.
Investors, who are particularly concerned about how climate change affects the companies they own, seek this information through a company's annual ESG report, putting pressure on corporations for transparency.
The global ESG disclosure and regulatory landscape is evolving rapidly.
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Greenwashing in the hotel real estate industry refers to the practice where companies misleadingly promote their properties and brand as environmentally friendly or sustainable, when in reality, their practices do not measure up to these claims.
Subsets include climate-washing, wellness-washing, and more.
Customers are savvy and the trend to call out a company’s greenwashing marketing spins on social media is growing.
We can make buildings to simply meet code, or to achieve true sustainability.
Source: ILFI, creators of the Living Building Challenge, a certification, philosophy, and advocacy tool for projects that aim to move beyond merely being less bad and become truly regenerative.
How Hotels Are ESGing Their Properties
3rd-party certifications (such as LEED, BREEAM, WELL) for new construction and existing buildings
Reducing embodied carbon through adaptive reuse, retrofits, and repositioning
Solar on-site
Water reuse systems (such as sending bathroom sink water to irrigation)
Elevating women and BIPOC into positions of leadership
Procuring products from businesses with a positive impact
Partnerships and giving back programs to local community organizations
Inviting guests to participate in sustainability initiatives
Establishing ESG committees and publishing data-driven Sustainability and ESG Reports to increase transparency
Tying salaries and bonuses to ESG performance
Consider the above an appetizer list of sustainability-driven initiatives. Each bullet requires a hyperlink to an educational article for expanding on the lingo and concepts, but said articles are not yet written.
Urban Hotel Case Studies
GAIA’s Impact
Santa Monica Proper Hotel
This 1928 landmark building was rehabilitated and adaptively reused. By avoiding demolition, the project team also avoided releasing stored carbon (also known as embodied carbon) into the atmosphere. The hotel was awarded the 2020 Santa Monica Conservancy President’s Award.
GAIA managed the certification process, achieving LEED Silver, leading to 51% water use reduction, 19% energy use reduction, and 76% landfill diversion.
Solar was installed on-site to reduce emissions, and GAIA commissioned the systems for energy efficiency and performed ongoing commissioning to ensure the property is proactively maintained and operates at peak performance, thereby minimizing energy waste and further supporting sustainability goals.
GAIA’s Waldorf Astoria Beverly Hills
GAIA is a passionate advocate for water conservation. Through our advisory process, this 170-room luxury urban hotel installed Aquacell®, a greywater system that recycles 1200 gallons daily for landscape irrigation.
Aquacell systems collect greywater (from showers, drains) or blackwater (from sewer) generated on-site and purify it –without chemicals – making it available again for toilet flushing and irrigation or as a contribution to the surrounding environmental flow.
Learn more: Aquacell systems in hotels and multifamily properties →
W Hotel Hollywood, Los Angeles, CA
When the 1 million+ square foot old Hollywood glamour property was constructed in 2010, it was the 1st LEED certified building in Los Angeles. Achieving Silver status, it scored the most points in the Sustainable Sites category by incorporating an on-site Metro Red Line Station that connects the hotel with the extensive Metro Rail and Bus system serving Los Angeles County, increasing access to public transportation and, thus, reducing emissions associated with driving.
As part of their commitment to corporate responsibility, the development team became LEED accredited professionals (APs) to enhance their expertise in green building practices. GAIA provided them with comprehensive training to prepare for their certification exams.
W Hollywood Hotel & Residences earned points across all LEED categories: water efficiency, energy and atmosphere, materials and resources, indoor environmental quality, and innovation in design.
Miyako Hybrid Hotel, Torrance, CA
Miyako is an eight-story, 209-room boutique hotel and spa in Southern California that we helped earn LEED Silver certification. Eco-conscious features include:
Stormwater is infiltrated onsite and treated to remove contaminants to reduce environmental impact on waterways.
Solar array with high-efficiency HVAC and lighting contributes to 15% cost savings.
A reflective "cool roof" reduces the heat island effect.
GAIA managed the certification process, helping the property to earn LEED Silver. During construction, the hotel diverted 80% of waste from landfills, recycled and prioritized materials which were extracted, processed, and manufactured locally (within 500 miles.)
UCSD North Torrey Pines Living & Learning Neighborhood, La Jolla, CA
The 1.2M campus in La Jolla, California, while not a hotel, merits attention in the hospitality category.
In our role as a Sustainability Owner's Representative, GAIA mastermind a campus-wide sustainability plan to integrate state-of-the-art amenities and engaging programming to foster wellness and lifestyle for both students and teachers, prioritizing occupant comfort. Employing the LEED framework, GAIA established stringent green building standards to achieve certifications and renewable energy goals. The project has won many awards.
HKS Architects, renowned for their innovative approach, contributed significantly to this achievement by designing the student residential towers with a keen focus on passive survivability. These structures boast natural ventilation systems and operable windows, a design choice that ensures comfortable indoor temperatures under current conditions and, crucially, in the event of elevated temperatures or loss of mechanical functionality in the future. This foresight embeds resilience into the very fabric of the buildings, preparing them for an increasingly unpredictable and challenging climate.
Inspirational Initiatives
Hotel Magdalena, Austin, TX
Bunkhouse Group developed the 1st mass timber boutique hotel in North America.
Mass timber is a broad term that encompasses various types of panelized and engineered wood products, including columns, beams, and panels. Designed as an alternative to carbon-intensive building materials like concrete and steel, it has comparable strength, lighter weight, and is fire resistant.
Mass timber provides aesthetic appeal while sequestering carbon, contributing to the decarbonization of buildings.
Article: How Mass Timber is Changing Real Estate →
Structural Engineer Case Study: StructureCraft →
HOST Hotels ESG Report
HOST Hotels is the largest lodging real estate investment trust (REIT) with 78 luxury hotels in the portfolio. The company publishes robust annual ESG Reports (previously Corporate Social Responsibility (CSR) Reports) and have won several sustainability awards – not because they’re the “greenest” but because they are good at providing investors and stakeholders with the criteria they seek.
Explore: HOST Hotel Corporate Responsibility and ESG Performance →
The Standard Hotel’s Mushroom Farm
Soon, the world’s first-ever in-hotel mushroom farm will be found at The Standard, East Village, New York. Serving hotel guests with food grown on the property is not only a fun story to tell but the very definition of sustainability.
Without repeating too much of what you already know, growing your own food
Avoids emissions associated with long-haul food transportation
Reduces refrigeration (also associated with transport) and managing inventory
Creates more nutrient-dense meals for guests
Promotes education and deeper understanding of food supply systems
Hotel Ziggy, West Hollywood
“10% of our company bonus scheme is related to our overall ESG initiatives, including a commitment to environmental protections, efficient uses of natural resources, promoting human rights, and collaborating with our hotels and stakeholders to ensure we are committed to the communities in which we operate.”
Where to Begin?
Build an interdisciplinary team.
Sustainability impacts every department. Assemble someone from finance (ideally the CFO), someone from operations, and someone from marketing. Given the evolving regulations for ESG reporting, involve someone from legal.
If you don’t already have one, hire a Director of Sustainability or ESG for efficient coordination.
Conduct a Materiality Assessment
Time to identify ESG issues and metrics that matter most to the business.
Create an Annual Sustainability or ESG Report.
Your company’s leaders need to develop an ESG reporting strategy. This means understanding regulations, selecting a framework, and collecting data across teams and suppliers. Then, disclosing to reporting frameworks. There are tech companies helping to streamline this process, such as Measurabl.
Market your sustainability initiatives.
Annual reports are marketing opportunities to share what the company is already doing which enhance brand image and reputation. Activities such as volunteer hours, sourcing produce from local farms, and highlighting employee diversity, are all part of one’s sustainability journey. If your portfolio already has green building certifications such as LEED, GAIA is able to track down stats and convert them into storytelling fun facts.
Aim for incremental improvements.
Most companies have already set science-based and/or net-zero targets. Here’s where the real work begins. The development of clear sustainability specifications and a roadmap is crucial. These tools guide design and construction teams in upholding consistent standards across both new builds and existing properties.
At GAIA, our role as sustainability consultants is to partner with developers, owners, architects, and operators, guiding them towards informed decisions. Our collaborative efforts result in highly efficient buildings that enhance profitability as cost savings are often a direct outcome of sustainable practices, such as reducing energy and water usage.
Beyond the typical focus of corporate ESG reports on carbon emissions, it's vital to acknowledge the less tangible impacts. Actions that improve indoor air quality, for instance, significantly benefit occupant health and wellbeing. This leads to increased morale, satisfaction, and productivity, and even longer life spans.
In terms of long-term financial gains, buildings with 3rd-party certifications stand out. These properties not only attract and retain top talent, tenants, and customers who value sustainability but also safeguard the physical structures against climate-related risks. Such proactive measures are increasingly under the scrutiny of investors, who consider a building's resilience to climate change as a key indicator of its long-term value and sustainability.
When is the best time to engage sustainability consultants?
Early in design lies the greatest opportunity to make sizable impacts.
Have questions? Contact hello@gaiadevelopment.com to begin the conversation.
