All hotel investors are looking to profit off their investments, but many are also looking to pursue projects that benefit both their employees and their communities.
During the "Checking In for Change: The Transformative Potential of Social Impact Investing for Hospitality" session at the 2024 International Hospitality Investment Forum, Martinhal Group CEO Chitra Stern said education should be a focus for investments. Stern has been part of the team that launched Edu Hub Lisbon, including a K-12 international school. She added that project has a hospitality element to it but the lasting benefit will be built around the benefits of the school.
"You have a series of families moving to this particular location where there wasn't an international school, and that was a barrier to further foreign direct investment," she said.
Martinhal Group developed a five-star resort in the Algarve region of Portugal that was built in such a way that it could be a huge boon to the local community.
"The overall positive externalities of the local community were huge," Stern said. "We delivered this five-star resort [that benefited] local suppliers, local surf schools, guides. All those businesses were positively impacted. Local restaurants extended their seasons."
Benjamin Habbel, founder and managing partner of Limestone Capital, said when measuring social impact, hotel companies must start with employees and local stakeholders.
"Essentially every human that touches the project or touches the company," he said.
Renovating an asset and pushing it up to a high segment can have a huge social impact for everyone involved, Habbel said. He added the hotel industry "works with a lot of wage segments that are in the lower end."
"So if you can create upward mobility, that has a huge impact for local families," he said. "If you create an environment where you have international tourists coming in that tip and that pay not €2.50 ($2.69) for a beer but €18 for a cocktail, it has a completely different impact."
Habbel said projects should also have a broad outlook on employees' lives, including housing. Limestone Capital renovated a resort in Sardinia, Italy, and made sure to renovate staff housing as well, often using high-end furniture and lighting fixtures from the resort itself.
"So it's about thinking how can we improve the everyday life of an employee," he said. "The downstream and upstream effects of that is enormous."
Thomas Laakso, partner at CapMan, said his company similarly thinks of employees and other stakeholder groups — such as local supplier networks — when looking at the social benefits of their projects.
Investors should be particularly thoughtful about what suppliers they're using to make sure they also have high standards, Laakso said. He added that will also have an impact on how potential guests look at your brands and properties.
"There are all these cases of various brands that got into trouble — like clothing brands that realized there were some sweatshops" in their supplier network, he said.
Laakso said during construction, it's important to make sure contractors follow strict safety standards as well. And it's important to track who they work with as well to make sure those standards are upheld.
"That's a business that notoriously subcontracts, so you might have somebody at the higher level that looks good on paper but they then pass it on to someone else, and that's where you might get into kind of questionable practices because it saves money," Laakso said. "So I think those are things you need to be mindful of."