Why UK hoteliers must not limit their green hotel upgrades to EPC ratings

Why UK hoteliers must not limit their green hotel upgrades to EPC ratings

ESG (Environmental, Social, and Governance) is a subject around which the debate never ends in the UK property sector. Last year, the Government introduced new regulations stating that all commercial rented buildings should have a minimum energy efficiency rating of EPC B by 2030, where cost-effective.

These regulations have impacted sectors like offices and retail, but have had a limited impact on hotels. This is because the legislation doesn't cover owner-operated commercial buildings, which includes many independently operated hotels. UK hotels just require an energy performance certificate (EPC) if they are rented or have been put up for sale marketed for sale. At present, only two percent of hotels in the UK are leased. The irony is that the hotel sector contributes in a big way to the overall pollutant factor and scores low in the energy efficiency aspect of the property market. It needs to make significant improvements to reduce its carbon footprint.

Sustainable Hospitality Alliance has set targets for hotels to lower carbon emissions by 66 percent per room and 90 percent by the year 2050 to meet the Paris Climate Change obligations. Much hospitality groups have already taken steps to address environmental concerns. Marriott, for instance, has committed to reducing water intensity, carbon intensity, waste to landfills, food waste, and increasing renewable electricity use.

ESG is also increasingly important to consumers. A report by Booking.com in April 2022 found that 81 percent of travelers consider sustainable travel important, with 50 percent saying recent news about climate change has influenced their travel choices. People are opting to travel closer to home to reduce their carbon footprint, and a significant percentage of them actively seek information on a hotel's sustainability efforts before booking. Improving a hotel's EPC rating through changes in building infrastructure is essential, but operational performance will have a more positive impact on the environment.

Investing in advanced building management systems, identifying energy-intensive processes, and implementing low-carbon technologies will benefit the planet. Moreover, these changes can lead to increased customer demand, lower operational costs, higher operational profits, and increased hotel asset values.

Hotel owners must act quickly to comply with sustainability regulations and should receive support if they are lagging. Failure to take sufficient action could lead the hotel industry to face a situation similar to the current state of the office sector. In London, nearly 10 percent of office buildings have poor energy performance ratings, and they will be prohibited from being leased once MEES regulations come into effect in April. The hotel industry should learn from this situation to avoid such issues and proactively establish clear environmental, social, and governance (ESG) targets. This may involve implementing a smart building-management system, prioritising local product sourcing, and integrating ESG goals into the hotel's annual plans and performance evaluations.

Leveraging emerging AI technology can provide a competitive edge in sustainability efforts. A smart climate control and lighting automation system can boost energy efficiency and reduce operational costs. Smart HVAC automation alone can save up to 30 percent of a hotel's total energy consumption. However, such changes can be drastic and costly. More affordable options could include switching to greener suppliers and increasing the procurement of local products. Expensive retrofitting solutions must be put on the back burner until capital expenditure becomes more readily available. The UK economy is still not showing signs of significant improvement. Hoteliers will recognise this as a favourable moment to implement sustainability measures. These measures can lower operational costs and become vital for attracting future investors.

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