Shareholder and government to drive ESG change at Asia Pacific hotels
Almost 75% of investors polled by JLL now see ESG factors as critical when deploying capital in the hotel sector
SINGAPORE, June 8, 2022 – Investors in Asia Pacific hotels will increasingly make investments based on sustainability aspects as expectations from shareholders and ambitious net carbon zero targets assigned by governments influence decision-making. Approximately 75% of investors surveyed by JLL identified environmental, social and governance (ESG) factors as important when deploying capital, despite Asia Pacific’s hotel sector lagging behind other regions in the adoption of sustainability practices.
According to JLL analysis, both investors and operators will place a higher priority on ESG aspects of hotel investment to help secure funding for asset purchases or redevelopment. Given that the majority of the global investors are headquartered in Europe and the United States, where they face strict requirements from institutions and governments, Asia Pacific’s hotel sector is not immune from scrutiny and will require more defined ESG strategies to meet both investor and consumer demands.
“The hotel industry in Asia Pacific does lag other regions when benchmarked on sustainability factors and practices. Mounting pressure from both shareholders and governments is compounded by the fact that many investors have limited access to sustainability-linked loan facilities in Asia Pacific. However, we do see opportunities for new developments built by local high net worth individuals and local corporates and developers to tap global investors for green funding options,” says Nihat Ercan, Senior Managing Director, Head of Investment Sales, Asia Pacific, JLL Hotels & Hospitality Group.
Globally, the hotel sector accounts for 1% of global carbon emissions according to the United Nations World Tourism Organization (UNWTO). The industry is also the biggest consumer of energy and water among all real estate asset classes. However, emissions vary by geography, with Asia Pacific seen to be lagging behind North America and Europe, producing more emissions per occupied room – due primarily to climate and air conditioning usage – than other regions.
The challenge in Asia Pacific, but also in other regions of the world, will be based on financing for new development and in retrofitting existing hotels to make them net-zero. However, JLL analysis suggests that any meaningful movement towards a longer-term ESG-based transition will require partnership between both investors and operators to meet end-user expectations.
Furthermore, the pandemic has changed consumer expectations and elevated awareness of ESG principles within the international hotel sector. More than 80% of global travellers plan to stay at a sustainable hotel at least once in the next year, according to Bookings.com.
“To meet changing consumer demands, hotel owners and operators in Asia Pacific will be forced to adapt business strategies to include clear ESG factors and goals. Hotel operators are an important sale vector to drive technical standards, especially as they are on the forefront and in direct contact with clients and accounts who are increasingly sensitive to sustainability,” says Xander Nijnens, Managing Director, Head of Hotel Advisory and Asset Management, Asia Pacific, JLL Hotels & Hospitality Group.
While hotel investors in Asia Pacific are behind other parts of the world when it comes to sustainability, hotel operators are leading the change in the sustainability journey regionally, having implemented several measures to monitor energy and water consumption. Approximately 50% of polled hotel operators identified operational aspects of hotel management and maintenance as their key sustainability priority.
JLL surveyed approximately 168 clients (investors and operators) across Asia Pacific in April for this report. Learn more here.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 100,000 as of March 31, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.