I'm going to start this piece with an assumption everyone might not agree with: U.S. hotel companies are lagging behind their global counterparts when its comes to environmental, social and governance efforts.
Without getting into the "whys" for that, it's been interesting for me to think about what might be able to change the trajectory on this.
While attending HSMAI's Commercial Strategy Week events last week, I heard an interesting point during a panel on how sales, marketing and revenue management teams are working to better align their efforts. PM Hotel Group Senior Vice President of Sales and Marketing Lovell Casiero said sustainability is becoming a greater focus for companies as her company prepares for the upcoming request-for-proposal season.
I don't think I'm being overly jaded in saying that the vast majority of U.S. hotel companies, even if they've made strides when it comes to sustainability initiatives, are still more concerned with the fate of their bottom line than their role as responsible stewards of the environment. So tying the former to the latter can only be a good thing, in the long run.
Assuming this is true and that more potential corporate travel clients will be looking for demonstrable and meaningful improvements in the arena of ESG, the best long-term strategy will obviously be to take the entire matter much more seriously and tackle it head-on in a more substantial way. The alternative means making risky bets in one way or another.
In the short term, I can somewhat see the logic in a company saying: "You know what? It's expensive and difficult to make improvements beyond our core business. Instead, let's focus on the highly profitable leisure business we're seeing across the board."
But at the same time, betting that a historically strong wave of leisure demand growth will just continue indefinitely seems beyond risk.
The other alternative to embracing ESG would be to focus on working with clients who are less concerned about things like sustainability, but that necessarily means limiting your pool of potential corporate travel clients. Effectively limiting your own pool of demand doesn't seem like a great idea for any hotel, and especially not at a point when so many hotel companies are looking to remix their corporate accounts to ensure they're getting the most profitable demand across the board.
If we assume every business is a rational actor, which is a foolish and foolhardy thing for anyone to think but I'll do so right now for simplicity's sake, calculating the risks and rewards to a business will always be the key driver to making sweeping changes to their overall model or operations. In Europe, where ESG is much more at the forefront, those businesses face clear regulatory risks if they're out of compliance. Here, it seems the risk-reward calculus is much more driven by whether big-ticket corporate clients will want to continue to work with a company they perceive as having a negative impact on society as a whole.
So here's to hoping that more companies will use their platform and power to continue to move things in the right direction.
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