Cooperation is key

Hotels must slash their greenhouse gas emissions if the industry is to stay in line with the global temperature cap set out in the Paris Climate Agreement. A more integrated approach with closer cooperation between operators and owners will be crucial to hitting the climate target. By Paul Allen

Here’s the problem: making hotels sustainable requires accurate data on all aspects of their operations to identify problem areas and implement improvements. Close cooperation between operators and owners is vital – something that has been wanting in many cases.

“There is still a lack of willingness on the part of operators to make consumption data comprehensively available and jointly drive forward necessary optimisation,” Henning Schneekloth-Plöger, Senior Asset Manager Hospitality at Union Investment, observes. “Many operators find it difficult to provide full transparency. And there is a fundamental suspicion that the owner could interfere too much in operational issues.”

Using data to track the impact of operational decisions

Frustrated by the transparency shortfall it faced, pan-European real estate investment manager Propreal Capital Partners built the Bluekern proptech system to create a centralised database of reliable information. Originally developed for Propreal’s own business, Bluekern is now available as a standalone service to third parties.

Bluekern provides in-depth monitoring of every data point generated by the property, links it with accounting entries, and combines the output with relevant external data such as weather forecasts, UV levels or air quality, Bluekern Managing Director Sébastien Le Bras explains. “The data establishes a permanent link between every event that happens in the hotel and the financial statements, from which we can derive key performance indicators. This allows operators and owners to track the impact of operational decisions from a sustainability and financial perspective.”

Exceptionally sustainable: Completed in 2021, the Mercure hotel owned by Union Investment in Katowice, Poland, follows a “Green and Clean” theme and was developed by UBM, the subsequent leaseholder.
Mercure/Michael Nagl
Owners need a comprehensive understanding of their costs and sustainability, rather than just top-line performance.
Marcus Siggelow Head of Asset Management, Propreal

Armed with reliable data, users can optimise efficiencies and make future projections. “For example, by linking every purchase to a sale, users can see where there is spoilage and if they can optimise their menu engineering and inventory, helping both sustainability and profitability,” Le Bras notes. Standardised financial reports then allow users to benchmark their sustainability efforts against other hotels.

Operators benefit because they can see what is happening in the hotel in real time and track the main KPIs for each department. And for owners, access to the same figures as management enables them to have an educated discussion about the strategy for the asset, says Marcus Siggelow, Propreal’s Head of Asset Management. “Owners need a comprehensive understanding of their costs and sustainability, rather than just top-line performance, and they need full transparency to do so.”

Closer collaboration between operators and owners needed

Data collection is a key tool in Union Investment’s sustainability drive, too. “We currently use artificial intelligence to capture consumption data for heat, water and electricity from utility bills,” Schneekloth-Plöger explains. “Our system is based on the ESG software from Goby, which has helped us set up a customised programme to conduct our analyses. As the database grows, we will then be able to benchmark the portfolio in terms of sustainability.”

The firm is actively approaching its hotel operators as it seeks to roll out energy monitoring systems across its assets, with 28 hotels already equipped. “Energy monitoring offers great opportunities for both owners and operators to control consumption in the property and make it more efficient,” Schneekloth-Plöger says. And that message increasingly resonates with operators, particularly given the rise in energy prices, he adds. “Operators are now coming to us looking for joint solutions.”

We consistently take sustainability into account in our modernisation roadmaps.
Henning Schneekloth-Plöger Senior Asset Manager Hospitality, Union Investment

For example, the hotel managers that UBM hotels Management GmbH works with in Poland pursue clearly defined sustainability goals, as does UBM Development AG. By implementing the EUDT energy monitoring system – with its simple and clear real-time consumption data – the outcome of energy saving measures can be promptly and accurately assessed. This provides technicians on site with a sound basis for analysis and for making decisions on how to optimise consumption in the hotels. Energy monitoring has now been installed either during construction or as a retrofit in 10 out of the 12 hotels Union Investment manages jointly with UBM, Schneekloth-Plöger notes, including the Radisson Blu in Krakow and Holiday Inn Express Alexanderplatz in Berlin.

As it pushes towards carbon neutrality, Union Investment has also started integrating sustainability clauses into its lease agreements as part of the refurbishment and modernisation of its hotel portfolio. Examples to date include Hamburg’s Steigenberger Hotel and the Radisson Blu at DomAquarée in Berlin.

“In addition, we consistently take sustainability into account in our modernisation roadmaps for hotels due for modernisation or restructuring in the next three to five years,” Schneekloth-Plöger says.

Every hotel should be designed for sustainability from the start

For mixed-use, ESG-focused operator Kerten Hospitality, collaboration between stakeholders is central to sustainability success – but that focus ideally needs to be baked in at the project’s outset, from concept to guest hosting and operations.

“Sustainability should start with the architectural, design and technical processes,” says Marloes Knippenberg, Kerten Hospitality’s CEO. “Many sustainable building procedures need approval from the owners at a project’s initiation, such as following LEED standards, biophilic designs, solar and wind implementation, waste recycling and composting methods, integrating water recycling methods from grey water and rainwater, even down to the type of paints used.”

Trust is needed between the investor and operator. Trust in the concepts, trust in our results, and trust that sustainability is about longevity.
Marloes Knippenberg CEO, Kerten Hospitality

Strategies also need to be individualised for each property in every location to ensure they meet local laws and regulations. “For instance, some countries’ governments fully support waste recycling measures, even putting in place mandates to ensure proper waste recycling by businesses,” Knippenberg notes.

Many investors are reluctant to integrate sustainability measures, though, due to the higher upfront costs, and want proof of returns within two to three years, she adds. The operator must therefore be innovative in finding new ways to increase operational efficiency while reducing long-term costs. An operator well-versed in ESG practices can also ensure a project remains sustainable throughout its lifecycle, even if it undergoes space repurposing or different transformations, Knippenberg says.

“So trust is needed between the investor and the operator. Trust in the concepts we are promoting, trust in our results, and trust that sustainability is about longevity – for the environment, the business, people and the community,” Kerten Hospitality’s CEO concludes.

By Paul Allen

Title image: Radisson Hotel Group

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