“The greatest threat to our planet is the belief that someone else will save it,” Robert Swan once said. And, in this one brilliant sentence, he encapsulated the challenge every industry, every responsible company, every citizen faces today.
Accommodations account for roughly 10% of the total annual emissions of the tourism sector. A pioneering study by EY Parthenon found that accommodations will have to invest €768 billion over the next two decades to achieve net zero – €243 billion in greenhouse gas (GHG) abatement measures and €525 billion for greening the energy supply of the remaining emissions. This is a significant figure, and to put it in perspective, this is roughly equivalent to the combined annual revenue of the global accommodation sector.
1. Accommodations can lead the climate transition of the tourism sector
While the decarbonization of the sector is a major challenge for the entire industry, the good news is that there is significant potential for emissions reductions that are profitable to accommodations. These measures provide accommodations with a double dividend: they cut both emissions and operating costs. Moreover, as the study shows, net zero emissions are feasible with existing technologies. In contrast, other parts of the tourism industry, e.g. aviation, still require the development of new technologies to enable the required transformation. Accommodations thus have an opportunity to be a frontrunner and lead the climate transition of the tourism industry.
That is not to say these emission reductions are easy to achieve. Significant upfront investments are still needed at a time when accommodations around the world are only slowly starting to recover from Covid-19. There are also opportunity costs to these investments. However, it does provide an opportunity to heed the call for urgent action and achieve timely progress in decarbonizing the sector. Over time, accommodations can tackle more challenging and more costly reduction measures.
2. The benefits of adopting the most efficient technologies
A wide range of carbon-saving practices is available for accommodations to reduce usage of natural resources, energy, and waste disposal. The potential amount of CO2-equivalent that can be abated with 24 specific abatement measures identified in this study amounts to 87Mt annually. This means that an accommodation can in principle reduce its total GHG emissions by up to 32% with these measures. A large share (c. 58%) of these measures have a positive business case over a 15 year investment horizon and account for c. 76% of the total abatement potential.
Taking into account the current adoption levels, accommodations can achieve an actual reduction of total current emissions of 15–20% by implementing the most efficient available
The study provides a detailed derivation of the potential and abatement costs for each measure, taking into account different climate zones, energy mixes, and accommodation types and sizes. This menu of measures provides accommodations with the opportunity to create their own transition path in abating the direct emissions from their operations, taking into account their individual circumstances, and increasing their ambition and (financial) commitment over time. In the aggregate, it provides a roadmap for the accommodation sector to achieve net zero emissions by 2050.
3. Barriers to implementation
However, a large-scale survey of accommodation providers shows that there are important barriers to progress and realize the full abatement potential. The most important are: an insufficient sense of urgency, knowledge gaps, and a lack of access to financial resources.
3.1. Lack of urgency
A lack of urgency is the most important barrier to implementation. For a majority (51%) of the remaining abatement measures, accommodations do not feel the need to take urgent action. Many accommodations are driven primarily to create a positive guest experience and improve their profitability. Decarbonization measures are implemented with these objectives in mind. Showing how investments improve their operational efficiency and how inaction will ultimately be more costly (e.g. due to higher energy costs) are important levers to drive their ambition and unlock additional efforts.
3.2. Knowledge gaps
Knowledge gaps and lack of access to relevant information are important barriers for about one third (30%) of the remaining measures. A large group of accommodations are generally ready to be more ambitious in reducing GHG emissions. They have already implemented many measures but are lacking relevant information to enable them to implement even more. This includes a lack of data about the sustainability impact of specific measures, the financial implications, and practical considerations (e.g. impact on guest experience during implementation). Providing accommodations with tailored information and support can unlock this potential.
3.3. Lack of financial means
A lack of financial resources or access to capital are hindering progress on one fifth (20%) of the remaining measures. While many emission reduction measures are generally profitable over a 15 year investment horizon, they might require significant upfront investments. Some measures are also not profitable at all and thus require a larger commitment by accommodations.
Financial incentives are an important trigger to unlock this reduction potential with the majority of accommodations (78%) indicating that subsidies are more important than loans. Overcoming these challenges and increasing overall ambition will not be easy. But what is true across economic sectors applies here as well – cooperation among all industry stakeholders — governments, travel associations, travel platforms, chains, NGOs, advisers, travelers is the shortest path to net zero. If we work together we can unlock these investments and master the climate transition of the industry.
Download the full study here