Hotel Execs: Costs—Not Sustainability—Still Dominate U.S. Corporate Travel Decision-Making

“They don’t care.”

That’s the word from Remington Hotels CEO Sloan Dean when asked if corporate travel managers and travelers actually make decisions based on sustainability. He added that pricing and budgets topped corporate travel managers’ priority list, and hotel executives speaking at the NYU International Hospitality Industry Investment Conference earlier this month largely agreed.

Even so, sustainability is growing in importance in the travel industry, according to hotel industry leaders, partially because it makes good business sense. Dean highlighted during the panel discussion, how LED lights in one building can pay for themselves in two years—highlighting a way to incentivize organizations to incorporate sustainable practices by looking at the longer term return on investment.

“There is smart business, particularly the ‘E,’ of environmental, social and governance” he said, but ultimately, about corporate travel managers: “They’re not making buying decisions based off ESG.” Dean wasn’t alone in that assessment.

“I agree. How long have we known that these are bad for the environment?” Omni Hotels & Resorts chairman Peter Strebel said while holding up a plastic water bottle provided at the conference.

A Slow Sustainability Journey

According to a report by CBRE Hotels Research, the hotel industry sits at a 96 on the CO2 scale as of March 2023, where 80 is the “average” CO2 emissions benchmark across all industries, showing that hoteliers have work to do even to meet current emissions standards, which environmental groups say need to be drastically reduced to meet the commitments brokered by the Paris Agreement. Thus, the hospitality and leisure industry has an “urgent need” to reduce carbon emissions, according to CBRE.

But if the industry is waiting for sustainability demand signals from corporate travel clients—particularly those in the U.S.—they may be waiting a long while.

According to BTN’s 2023 sustainability business report—in which BTN and BTN Europe surveyed 200 travel managers from May 18 to May 30 to find out how sustainability initiatives fit into travel management priorities in 2023—only 13 percent of North American respondents said their companies prioritize sustainability over pricing in supplier choices. This compared to 38 percent of respondents from Europe-based companies whose programs do weight sustainability over price. One quarter of the BTN survey respondent base was based in Europe.

Sustainability does directly impact travel managers when it comes to data collection and public accountability, according to a corporate travel report from Deloitte.

According to Deloitte’s global survey, 40 percent of travel buyers—across the U.S. and Europe—do collect and track some hotel sustainability data. Thirty-two percent said they look at hotels’ sustainability certifications and ratings, 38 percent look at proximity to key business locations to minimize transport emissions and 31 percent look at chainwide sustainability standards and initiatives. Two-thirds of the survey’s 334 respondents were European: 106 based in the U.S., 56 in the UK, 57 in Germany, 59 in Spain and 56 in France.

This could indicate some consideration of sustainability in terms of vetting hotels for preferred partnerships, in theory. In terms of U.S. participation in these activities, however, the overall survey numbers are likely buoyed by the European respondent base. And hoteliers aren’t seeing it translate—except in large companies that that have made public commitments. And that’s a minority of corporate business, said the NYU panelists.

“We’ve only seen [sustainability] influence large corporate group [business] from publicly traded [companies],” Dean said. Asked specifically if corporates beyond meeting planners who work for Fortune 500 companies with public ESG goals take sustainability into decision making, Dean was decisive: “No, they don’t care.”

Sustainability as Experience

While few U.S.-based companies seem to prioritize sustainable travel options over budgetary considerations, travel managers said they are concerned on a personal level. According to BTN’s sustainable business travel survey, 69 percent of North American travel managers said they are concerned about their company’s business travel emissions.

With business and leisure travelers, too, there appears to be a connection with ESG initiatives on personal level—but it’s still not a decision-maker for the booking, according to hoteliers.

“We have this program at Omni where if you don’t want your room cleaned, we donate a meal to Feeding America,” Strebel said, adding that the response varies by region. “In some markets, we get no uses and in [other] markets 30 to 40 percent of the hotels’ customers request not to have the room cleaned. It’s very regionalized. Certain sections of the United States are more into it than other places,” he said.

Outrigger Hospitality Group CEO Jeff Wagoner said customer uptake of sustainability programming is quite avid at resort locations.

“The resort traveler we’re seeing is conscious of [sustainability], and a lot of them do care,” Wagoner said. “We’ve created a program in Fiji where you can actually go and grow coral. Almost every guest takes us up on that opportunity.”

While the experiential aspect of environmentalism may be a draw for travelers globally, its importance wanes as a decision maker. “We did a huge survey of tens of thousands of people and [sustainability] ranks very low as the decision-making part of travel,” Wagoner said. “But in our resort community and [to] our employees, it’s important.”

How those types of programs influence corporate decision-making is less clear. Cost-neutral “sustainable meetings” packages or programs like at Omni that translate room cleaning into community impact programs may offer easy access to a feel-good option that also makes business sense for the hotelier from a labor and cost perspective. Therefore, hoteliers will want to push such programs to all users, both corporate and leisure focused.

Whether corporate (or leisure) demand for emissions-light travel—particularly in the U.S.—will be a serious factor in pushing hotels toward larger ESG goals remains a question, at least for now, especially if there are costs attached to those efforts.

For some hoteliers and corporates, the bigger push may ultimately come from government regulations. EU emissions reporting regulations have become common parlance among some travel managers since coming into force in January this year, and the reflection of environmental awareness in industry surveys seems clearer across that region than it is in the U.S.

That said, the EU’s Corporate Sustainability Reporting Directive will also impact U.S. companies with subsidiaries or major locations in Europe, so as government demands more transparency there may be additional pressure across all industries to keep emissions in check. U.S. emissions reporting standards also are on the way from the Securities and Exchange Commission and will potentially act as a launching pad for U.S. organizations and travel managers to act more decisively on sustainable travel initiatives, including the use

Angelique Platas www.businesstravelnews.com