As global sustainable development and the pursuit of "dual carbon" goals progress, the capital markets' attention to Environmental, Social, and Governance (ESG) concepts is steadily increasing, and the hotel industry is displaying more and more of its ESG performance.
From a policy perspective, in April 2020, in response to the negative impact of plastic pollution on health and the environment, the National Development and Reform Commission and the Ministry of Ecology and Environment issued the "Opinions on Further Strengthening the Control of Plastic Pollution." It stated that by the end of 2022, star-rated hotels and other venues nationwide would no longer actively provide disposable plastic products.
Looking at the hotel industry, based on energy consumption data for the year 2021 as per China Hotel Business Statistics, the average energy consumption per occupied room (POR) for full-service hotels is 182 kWh. When compared horizontally with more mature markets in the hotel industry, China's hotel industry still has significant room for optimizing energy consumption. With the continuous rise in energy prices, the cost of electricity for hotels has been increasing, further enhancing the hotel industry's focus on sustainability.
Meanwhile, consumers' willingness to engage in green and environmentally-friendly consumption continues to rise. According to CTRP's "2022 Sustainable Travel Consumer Report," the report, based on a survey of nearly ten thousand respondents from 11 countries and regions, reveals that nearly 80% of respondents attach great importance to sustainability and environmental factors in their travels. Additionally, nearly 70% of respondents are willing to pay higher costs to achieve sustainable travel experiences. According to McKinsey's 2022 Global Sentiment Survey data, a significant number of Chinese consumers are willing to pay a premium for companies making positive contributions to ESG aspects. This includes consumers who are willing to pay extra for socially responsible and environmentally friendly offerings, reflecting the preferences of consumers with a higher sense of social responsibility. For hotel consumers, products that embody ESG principles alongside quality can provide emotional value to consumers who have a strong sense of social responsibility, showcasing a "higher-end" lifestyle for such consumers.
Clearly, from the national-level dual-carbon strategy to the energy consumption pressures within the hotel industry, and further to the evolving sustainable values of consumers, all of these factors are driving the awakening of ESG awareness in the hotel industry and pushing hotels to implement more impactful measures. This article provides an overview of the basic situation of international hotels and representative local hotels in China and their progress in the ESG direction.
Among the international hotel groups in China, represented by Hilton, Marriott, and IHG, these companies have taken a series of specific measures and achieved results in areas such as carbon emissions, water resources, plastic reduction, and food waste.
Hilton, a globally renowned hotel management company, owns eighteen distinguished hotel brands. With over 6,400 hotels in more than 119 countries and regions worldwide.
In Hilton's "2022 Environmental, Social, and Governance (ESG) Report," they highlight several environmental initiatives. Under the Hilton Group Greater China, hundreds of energy-saving, emission reduction, and water conservation projects have been implemented in their hotels, resulting in energy savings and emissions reductions. Additionally, Hilton Group has been actively promoting the replacement of large-pack toiletries and advocating the use of electronic room keys to reduce plastic usage. In January 2022, Hilton Group introduced a charging station locator feature on their official website and Hilton Honors app. In response to the growing demand for low-carbon travel among Chinese guests, the Greater China region has been actively installing charging stations at their hotels. Currently, 20% of Hilton hotels in China are equipped with charging stations.
Regarding social responsibility, Hilton's global fund supports the "Fields of Hope" charity program initiated by the China Rural Development Foundation. This project aims to provide diversified solutions for poverty alleviation, rural tourism revitalization, and youth talent development in five rural communities in Shaanxi, Jiangxi, Guizhou, Henan, and Hebei provinces through hotel education, cultural exchanges, social media skills, and other training programs. Hilton was recognized as one of the best workplaces globally in 2022 and is included in several internationally renowned ESG ratings and indices, maintaining an AA rating from MSCI.
Marriott International was founded in 1927, with its headquarters located in Washington. The company operates 21 renowned hotel brands and manages over 4,000 hotels globally, with an annual revenue of nearly USD 20 billion.
In terms of low-carbon initiatives, Marriott utilizes renewable energy for preheating domestic water and power generation to reduce electricity consumption. Marriott International plans to complete solar installations in 32 resort hotels in China by 2025 and achieve green hotel certification for over 200 managed hotels by the same year. Additionally, Marriott plans to replace large disposable plastic bottles with refillable pump dispensers for bath amenities in all hotel rooms in China by the first quarter of 2023. This move is expected to reduce the annual disposal of 140 million small plastic bottles into landfills across all hotels.
Regarding social responsibility, Marriott has initiated the "Serve 360: Doing Good in Every Direction" program, which encompasses responsible travel in all aspects. Currently, Marriott International has deployed 145 BMW electric vehicles at 42 hotels in 14 cities in China and installed 42 charging stations to enhance charging infrastructure, promoting a new green travel experience. In 2020, Marriott was recognized as one of the world's most socially responsible companies and is included in various internationally renowned ESG ratings and indices, including MSCI, ESG Leaders Index, Bloomberg Gender Equality Index, and others.
In 2020, IHG published its "Responsible Business Report" outlining ten sustainable development goals to be achieved by 2030. These goals include a 46% reduction in carbon emissions, a 25% reduction in water consumption, and the elimination of single-use plastics in all guest rooms, among others. IHG also introduced the "Green Engage" program, allowing guests to participate in eco-friendly activities such as tree planting and beach cleanups. According to MSCI ratings, IHG received an A-grade ESG rating in 2020.
Compared to international hotel groups, domestic hotel brands in China still have significant room for improvement in the ESG arena.
HTHT (NASDAQ: HTHT ), the world's leading hotel group, was founded in 2005.In terms of environmental efforts, HTHT focuses on three main areas: green buildings, green operations, and eco-friendly hotel amenities. Green building initiatives include the use of more natural and recyclable materials, such as replacing stone with slate for decoration materials and switching from paint and wallpaper to bamboo fiberboard and stone-plastic board for wall coverings. In terms of green operations, as of the end of the 2022 ESG reporting period, HTHT achieved 100% LED lighting coverage in its hotels in China, and 32% coverage of air-source heat pumps in directly operated hotels. When it comes to eco-friendly hotel amenities, the water bottles used in Ji Hotel are made of PET material and can be fully recycled without labels. It is estimated that using recyclable water bottles helps Ji Hotel reduce carbon emissions by approximately 1,801.8 tons per year.
Regarding corporate governance, HTHT Group adopts incentive models such as bonuses, dividends, and equity incentives, providing performance-based compensation and benefits to all employees. As of the end of the reporting period, HTHT had 24,335 employees, with female employees accounting for 61.9% and part-time employees accounting for 2.9%. The number of female store managers reached 4,359, accounting for 56.7%. The company places a strong emphasis on employee training, with an average of approximately 68 hours of training for hotel employees and 48 hours for corporate employees in 2022. In terms of social responsibility, HTHT Hotel Foundation spent a total of CNY 1.442 million on charitable activities in 2022.
In Jinjiang Hotel's "2021 ESG Report," they emphasize environmental management. Leveraging globally leading efficient equipment and intelligent IoT energy-saving management systems, the Intelligent and Efficient Energy Center has significantly improved energy efficiency. It is estimated that the annual electricity consumption of Jinjiang Hotels will be reduced by approximately 45%, saving an average of around 5.7 million kWh per year, equivalent to saving 2,280 tons of standard coal and reducing carbon dioxide emissions by 5,685 tons.
In terms of social responsibility, Jinjiang Hotel has introduced multiple support policies within the industry, such as "reduction," "waiver," "delay," and "assistance," to address the urgent cash flow needs of its franchise partners. During the pandemic, Jinjiang Hotel was requisitioned nationwide, with a total of 1,066 hotels and 140,000 rooms used for pandemic response efforts.
Regarding corporate governance, Jinjiang Hotel places a strong emphasis on strengthening party leadership and integrity construction within the leadership hierarchy, more so than overseas enterprises.
BTG Hotels is one of the largest comprehensive tourism groups in China. BTG Hotels released its "2022 ESG Report," announcing its commitment to environmental protection. BTG Hotels follows the environmental concept of "reducing pollution, cutting carbon emissions, and increasing efficiency." They have implemented green and low-carbon actions throughout the hotel's design, construction, decoration, and operation processes. During the reporting period, they achieved a reduction in carbon dioxide emissions equivalent to 2,159 tons.
In terms of corporate governance, BTG Hotels focuses on caring for employee growth and contributing to community development. Despite the challenging conditions in the hotel industry, they have stood by their employees and communities, maintaining stable investments in employee compensation, benefits, professional training, and support activities. Additionally, BTG Hotels actively engages in social welfare activities, including caring for vulnerable groups, rural revitalization, and cultural heritage preservation. During the reporting period, they provided 2,023 isolation hotels for medical staff and isolated individuals and purchased nearly CNY 8 million worth of food from poverty-stricken areas.
Ssaw Hotels has currently achieved coverage in both business and leisure full-service hotel products, with investments in and management of over 300 hotels and 70,000 rooms in China. The 2022 ESG report shows that Ssaw Hotels's hotels are committed to green development, practicing energy conservation and reduction in green products and product design. For example, several brands under the group have switched from using plastic materials for combs and toothbrushes to straw materials, and they have replaced plastic roll film bags with stone paper for packaging and bags.
In terms of corporate governance and employee development, Ssaw Hotels strictly adheres to multiple labor protection laws and regulations. They have developed relevant human resources management systems, established comprehensive employment processes, and provided necessary safety precautions for their employees.
On the social responsibility front, during the normalization of epidemic prevention and control, Ssaw Hotels has taken on significant responsibilities in isolation facilities. As of the report's release, nearly 50 Ssaw Hotelshotels have joined the ranks of isolation hotels, actively fulfilling their social responsibilities.
Compared to international hotel brands, local hotel brands in China face challenges related to ESG disclosure. They tend to provide limited information, lack clear sustainable development goals and metrics, and often do not participate in ESG ratings by organizations like MSCI. These issues not only affect their competitiveness and reputation in both domestic and international markets but also hinder their innovation and progress in the field of sustainable development. The question of how to "seize the opportunity, change their mindset, excel in ESG, and move towards high-quality development" becomes a critical consideration for the hotel industry as a whole.