Post COVID-19 Hospitality: The Green Recovery Imperative

Hospitality and Tourism: The 2020 Reset

Following a decade of record growth both in terms of international tourism arrivals and contribution to the global economy, the international travel industry came to a neat-total halt for a few months during the 2020 COVID-19 crisis. Unprecedented measures, including travel restrictions, border closures and lockdowns, were put in place by national governments to mitigate the spread of the corona virus. The tourism and hospitality industries are at the forefront of this humanitarian emergency, which turned into a financial crisis. However, the hospitality industry in particular has also shown to be one of most innovative sectors in uncertain times adapting to keep operating; from emergency housing, coronavirus quarantines and daytime offices to full hotel-to-hospital conversions. Additionally, hotel companies have continuously supported communities by offering free food and accommodation to frontline workers and donating food to local charities and people in need. However, such pandemic can prove to be an existential threat to many companies. The crisis has exposed some of the industry’s weaknesses, such as high operational and financial gearings, thus reducing the capability of hotels operating at low occupancy for an extended period of time. This situation will result in a recalibration of the entire hospitality sector with weaker players struggling for survival and others bouncing forward with stronger operations standard operating procedures and forward-looking, long-term strategies where key components include digitalization, sustainability and consumer- centric processes . Particularly because “there’s nothing like a crisis to ignite innovation” (Rigby, Elk and Berez, 2020). Crises, as damaging as they may be, trigger opportunities to boost innovations in products, services and systems (Clark, 2020;). Hospitality innovation is thriving despite, or perhaps because of the pandemic (Hollander, 2020). In the middle of the crisis, the UNWTO received 1000 applications from startups and entrepreneurs in over 100 countries as part of the Healing Solutions for Tourism Challenge (UNWTO, 2020a). And while some hotels have been slow in capturing the potential for digitalization, the 2020 crisis has sparked and fostered that digital transformation. However, COVID-19 has laid bare many of the weaknesses in the tourism and hospitality system, internally in terms of risk and hazard management, contingency and resiliency plans but also in the way the industry blindly deals with the natural capital (de Bellaigue, 2020). The days when tourism, as an umbrella industry, was praised as the low-impact strategy to develop economies and bring in foreign currencies are gone. Thus, adaptability, cross-functional thinking and commercial acumen are all necessary skills to move past the 2020 reset button in other words to bounce forward, rather than bouncing back.

Post COVID-19 Hospitality: The Green Recovery Imperative
“Any new hotel building opening its doors today, which is not a nearly zero energy hotel or striving for carbon neutrality, becomes a burden for the industry as a whole in the long term”

The unprecedented situation the industry faced in 2020 is a twofold blow; (1) the imperative to deal with climate emergency and biodiversity collapse amidst a humanitarian crisis all the while (2) ensuring some kind of economic recovery. In the short term, the world is looking into the global economic reset with fiscal action amounting $10 trillion (IMFBlog, 2020). All sectors of national economies are affected, including the travel and tourism industry with its multitude of players, from large global actors such as hotel brands or online travel agents (OTAs) to small and medium sized (SMEs) enterprises, many family-owned and operated restaurants, bed and breakfast homes, travel agencies and specialized tour operators. Over the past five years leading up “The crisis has exposed some of the industry’s weaknesses, such as high operational and financial gearings, thus reducing the capability of hotels operating at low occupancy for an extended period of time. This situation will result in a recalibration of the entire hospitality sector with weaker players struggling for survival and others bouncing forward with stronger operations standard operating procedures and forward-looking, longterm strategies.” to 2020, one in four new employment opportunities was created by the travel and tourism sector globally (WTTC, 2020a). Traditionally a powerhouse of growth, regularly outperforming the global economy, the tourism industry contributed US$8.9 trillion to the global economy (10.3% of global GDP) in 2019 (WTTC, 2020b) before plunging in 2020. However, investments in the hotel industry have been high over the past two decades in an attempt to meet the demand but also to secure money in real estate projects. The global hotel construction pipeline (hotels in construction, in planning or pre-planning stages) has peaked at over 15,000 hotels in 2019 (Lodgingeconometrics, 2020a). Of those 15,000 hotels in the pipeline, over 6,800 are being constructed amidst the COVID-19 crisis. The steady growth of the number of hotels is associated with an explosion of sub-brands, usually under a larger known chain hotel brand. In the first quarter of 2020, the European hotel construction pipeline continued to expand where 45% of all projects were driven by four global hotel players only (Lodgingeconometrics, 2020b). The hotel industry is experiencing a drastic shift due to the COVID-19 crisis where numerous, financially weak players, potentially struggling before the crisis, will be pushed out by the fierce competition where larger, financially strong players may capture the opportunity to expand their brand portfolio, capturing future demand. Considering the central role the industry plays in the economy of many regions, it is not surprising that voices are being heard in regards to supporting the sector through the crisis. For example, the European Union (EU) advocates a ‘Marshall Plan for European Tourism’ which would help to “reinvent and rethink a sustainable, digital and resilient European tourism sector” (EC, 2020) making the industry central to the European Green Deal. The EU’s Green Deal goal is to achieve carbon neutrality, that is, net zero greenhouse gas emission by 2050 by injecting 1 trillion euros in that transition (EC, 2 0 1 9 ) . From clean energy to building and renovation and farm to fork strategy, the hospitality industry has the unique opportunity to be at the core of this transition, helping to shape the transformation and leading to a new, post COVID-19 normal. This transformation is needed at a global scale. This new normal requires the hospitality industry to implement solutions that lead to partial carbon neutrality by 2030 and full carbon neutrality by 2050. Thus, Green Recovery implies ‘ g r e e n investments’. Green investments being expenses an organization, public or private, is making in order to mitigate the impact on the environment and adapt to the climate change reality. Mitigation and adaptation strategies are two complementary approaches for responding to climate emergency. For example, a hotel investing in greater building insulation facing more extreme heat waves can be considered adaptation. Investing in standalone renewable energy production would be considered mitigation as it seeks to limit future climate change. When investments are made in preserving or restoring natural capital such as investing in standing forest, then mitigation and adaptation strategies work in tandem by regulating major climatic events, supplying society and the economy with ecosystem services. Green recovery also implies creating jobs; a priority for countries where millions have been thrown into unemployment. The International Energy Agency recently reported that, following a detailed analysis of the situation, targeting green jobs – such as retrofitting buildings to make them more energy efficient, putting up solar panels and constructing renewable energy plants – is more effective than pouring money into the high-carbon economy (IEA, 2020). Thus, the imperative to channel finance that supports the transition toward a low carbon, biodiversity-friendly economy. Considering the pipeline mentioned earlier and from a sustainability perspective: any new hotel building opening its doors today, which is not a nearly zero energy hotel (neZEH) or striving for carbon neutrality, becomes a burden for the industry as a whole in the long term. It is a dangerous planned obsolescence. A building is an asset, which remains more or less static for the next 30 to 40 years before it undergoes extensive renovations in its major components “For example, the European Union (EU) advocates a ‘Marshall Plan for European Tourism’ which would help to “reinvent and rethink a sustainable, digital and resilient European tourism sector” (EC, 2020) making the industry central to the European Green Deal. The EU’s Green Deal goal is to achieve carbon neutrality, that is, net zero greenhouse gas emission by 2050 by injecting 1 trillion euros in that transition (EC, 2019).” such as heating ventilation and air condition systems. The only major issue here is that in 30 years, carbon neutrality must be achieved if is there is hope to keep climate change in line with science-based targets as set in the Paris Agreement (to limit global mean temperature increase below 2°C above pre-industrial levels and to pursue effort to limit to 1.5°C (UNFCCC, 2020)).
So the question to be asking is: how do we create a hotel, which is kind to the environment (within the limits imposed by nature and the available resources), healthy to its workers, pleasing to its guests, efficient for the operators and profitable to its owners? A green recovery plan tackles these questions always with the three pillars of sustainability in mind; social, environmental and economic.

Towards 2050
The United Nations World Tourism Organization (UNWTO) reports that the tourism industry plays a major role not only in economic recovery of destinations and creation of employment but is equally a driver for peace and security, cultural preservation and environmental protection. The tourism industry is recognized by the global community as a major player in tackling many of the sustainable development challenges listed under the 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals (SDGs). The hospitality industry is at a crossroads in terms of sustainability management. Considering the current and future challenges and for the hotel industry to keep the pace set in global commitment such as the Paris Agreement on Climate Change, the industry will need to reduce its greenhouse gas emissions per room per year by 90% by 2050, a close to full decarbonization (ITP, 2017). Additionally, while the industry has made some advances recently in terms of single-plastic usage within the operations over the past 12 months, the COVID-19 crisis has created additional challenges on that topic where hotels must balance health and sanitation requirements with sustainability requirements. Further mitigation of solid waste, including most notably food waste must be put in place, thus aligning industry goals to the SDGs. Finally, the industry has an obligation towards employees and communities in developing equitable conditions, providing employment and minimizing economic leakages to ensure a sustainable infrastructure development of destinations, particularly in the global south. Education plays a central role in ensuring a green recovery where the industry pivots and takes on the social, environmental and economic challenges; hospitality education must be at the forefront of a future-proofed industry. Hospitality leaders, managers and hospitality management graduates have the opportunity and obligation to make a difference as decisions made today will impact those who take the industry reigns tomorrow.

References

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