HOTELS & LODGINGResearch Brief

Sustainable Industry Classification System™ (SICS™) #SV0201

Research Briefing Prepared by the

Sustainability Accounting Standards Board®

December 2014

www.sasb.org© 2014 SASB™

™

I N D U S T RY B R I E F | H O T E L S & L O D G I N G

SASB’s Industry Brief provides evidence for the material sustainability issues in the Hotels &

Lodging industry. The brief opens with a summary of the industry, including relevant legislative

and regulatory trends and sustainability risks and opportunities. Following this, evidence for each

material sustainability issue (in the categories of Environment, Social Capital, Human Capital,

Business Model and Innovation, and Leadership and Governance) is presented. SASB’s Industry

Brief can be used to understand the data underlying SASB Sustainability Accounting Standards.

For accounting metrics and disclosure guidance, please see SASB’s Sustainability Accounting

Standards. For information about the legal basis for SASB and SASB’s standards development

process, please see the Conceptual Framework.

SASB identifies the minimum set of sustainability issues likely to be material for companies

within a given industry. However, the final determination of materiality is the onus of the

company.

Related Documents

• Hotels & Lodging Sustainability Accounting Standards

• Industry Working Group Participants

• SASB Conceptual Framework

INDUSTRY LEAD

Nashat Moin

CONTRIBUTORS

Andrew Collins

Stephanie Glazer

Anton Gorodniuk

Jerome Lavigne-Delville

Himani Phadke

Arturo Rodriguez

Jean Rogers

Evan Tylenda

Gabriella Vozza

HOTELS & LODGINGResearch Brief

SASB, Sustainability Accounting Standards Board, the SASB logo, SICS, Sustainable Industry Classification System, Accounting for a Sustainable Future, and Materiality Map are trademarks and service marks of the Sustainability Accounting Standards Board.

INTRODUCTION

The Hotels & Lodging industry plays an

important role in the global and domestic

business and tourism markets. The broader

tourism industry is responsible for nearly one in

11 jobs globally.1 By providing accommodations

for both business and leisure travelers, the

hotel industry helps facilitate both domestic

and international business and provides support

to communities dependent on tourism. In some

countries, tourism represents a large

percentage of the country’s GDP and

employees represent a large portion of the

population. For example, in the British Virgin

Islands, Maldives, and Bahamas, tourism

represents 27, 22.4, and 22 percent of GDP

directly, and employees, 33, 21, and 31 percent

of the population respectively.2

Hotel operations are relatively resource-

intensive and can create a lasting impact on the

local environment. Many hotels are located in

sensitive ecological habitats, where the majority

of tourism takes place. Approximately 80

percent of all tourism takes place in coastal

areas, often near beaches and delicate coral

reefs.3 Therefore, the hotel industry has a social

responsibility to ensure that these locations are

not abused, and to support the local

communities in which they are allowed to

operate. Additionally, due to many large resorts

being located in coastal areas, the industry

faces challenges from shifting weather patterns

and rising sea levels associated with climate

change. These climate trends have the ability to

damage hotel properties and influence the

demand for tourism in coastal areas around the

world. This potentially harms not only hotel

companies, but also the communities in which

they operate. The Hotels & Lodging industry

also relies heavily on human capital for guest

services and daily operations. These jobs

typically require low-skill labor and long

working hours and are filled by a large

percentage of women and immigrants.

Mismanagement of fair labor practices can

result in disgruntled workers and high turnover,

as well as result in new wage regulation that is

costly to the industry.

Therefore, management (or mismanagement)

of material sustainability issues has the

potential to affect company valuation through

impacts on profits, assets, liabilities, and cost of

capital.

SUSTAINABILITY DISCLOSURE TOPICS

ENVIRONMENT

• Energy & Water Management

• Ecosystem Protection & Climate

Adaptation

HUMAN CAPITAL

• Fair Labor Practices

Investors would obtain a more holistic and

comparable view of performance with hotel

companies reporting metrics on the material

sustainability risks and opportunities that could

affect value in the near and long term in their

regulatory filings. This would include both

positive and negative externalities, and the

nonfinancial forms of capital that the industry

relies on for value creation.

Specifically, performance on the following

sustainability issues will drive competitiveness

within the Hotels & Lodging industry:

• Energy & Water Management in

operations as it relates to the industry’s

ability to reduce its overall energy and

water usage in order to limit its

environmental impact and create cost

savings;

• Ecosystem Protection & Climate

Adaptation as it relates to the

industry’s exposure to coastal areas

that may be damaged by inclement

weather and rising sea levels, and result

in declining tourism rates;

• Fair Labor Practices as it relates to the

industry’s treatment of workers that

may help to boost engagement and

reduce turnover costs.

I Industry composition is based on the mapping of the Sustainable Industry Classification System (SICSTM) to the

INDUSTRY SUMMARY

The Hotels & Lodging industry is composed of

companies that provide short-term

accommodation, including hotels and casino

hotels, motels, and inns dominated by large

hotel chains.I It is a competitive industry,

wherein customers base purchase decisions on

a wide range of factors, including quality and

consistency of services, availability of locations

both domestically and internationally, price,

and loyalty program offers.4, 5 Smith Travel

Research classifies branded hotels into six scale

segments based on the actual average room

rates. The categories include Luxury Chains,

Upper Upscale Chains, Upscale Chains, Upper

Midscale Chains, Midscale Chains, and

Economy Chains. Independent hotels are

included in a separate category, regardless of

their average room rates.6

Key revenue drivers include consumer and

business discretionary spending, domestic and

international travel, and consumers’ sense of

financial security.7 In the U.S., business and

conference travel constitute over half of the

market, while the rest is leisure travel.

International visitors booked 16.7 percent of

overnight stays.8 Major costs for industry

operators in the U.S. include purchases (room

supplies, food, and beverages), which account

for 38.1 percent of revenue and wages,

comprising 26.3 percent of revenue, followed

Bloomberg Industry Classification System (BICS). A list of representative companies appears in Appendix I.

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by depreciation and rent. Since hotels

increasingly do not own buildings, rent

expenses for the industry are rising while share

of depreciation is decreasing.9 The hotel

industry is seasonal by nature, with revenues

being lowest in the first quarter and highest in

the third and fourth quarters due to summer

vacation and holiday travel.10

Within the U.S., the total market for hotel

accommodations is relatively split between

business and leisure travel.11 Hotel and lodging

companies are experiencing a boost from

international travel as the economy recovers in

the years following the 2008 recession.

According to the World Tourism Organization,

the number of international tourists reached

1,087 million travelers in 2013, up five percent

from 2012. During that period, for the first

time ever, over 1 billion people traveled

internationally. Roughly 52 percent of all

international visits in 2013 were attributed to

leisure, recreation, and holidays. Next, 27

percent traveled for visiting friends and family

or for health reasons. Lastly, 14 percent

traveled for business and professional

reasons.12 The industry has gradually recovered

from the global recession of 2008 to 2010,

when revenues fell sharply due in large part to

declines in global business and leisure travel.

The global Hotels & Lodging industry generated

$145 billion in revenue, with 85 percent

generated by non-casino hotels and motels.13 In

2013, the median operating margin for such

traded companies was 10.8 percent, while the

median net profit margin was 4.9 percent. Prior

to the financial crisis, companies were

experiencing margins of about 17 percent and

12 percent for median operating and net profit

margins respectively. But during 2008 and

2009, they fell to about 7.5 percent and 3.5

percent respectively.14

Growth in the global middle class will be a key

industry driver in coming years. The global

middle class is expected to rise to five billion

people by 2030 from two billion in 2010, with

growth occurring primarily in Asia, the Middle

East, Latin America, and Africa. As the industry

has matured in North America and Europe,

companies are focusing on developing markets,

such as China, for their strategic expansion

plans.15, 16 Like most global companies, large

hotel chains operate across many regions of the

world and have to navigate various legislative

regimes. For example, by the end of 2012,

InterContinental Hotels Group operated in

nearly 100 countries, Marriott in 72, and Hilton

in 78.17, 18, 19

While most major companies are U.S.-

domiciled, a handful of large hotel chains,

namely InterContinental and Accor, are

headquartered internationally. The top four

players—Hilton Worldwide, Marriott

International, InterContinental Hotels Group,

and Starwood Hotels and Resorts—control 41

percent of the domestic hotels and motels

revenue.20 Their market share has increased in

recent years as merger and acquisition (M&A)

activity has been on the rise. Most of the

expansion was achieved through franchising,

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which requires lower capital outlays and

exposes operators to fewer risks. Expansion

through franchising requires hotels and lodging

companies to have a well-established

reputation, which is what makes brand

recognition one of the biggest barriers to entry

for new players.21 Nonetheless, large hotel and

motel chains may face some competition from

smaller operators and privately held companies.

Businesses are often structured and source

revenue in one or more of the following ways:

direct revenue from hotel services, including

room rental and food and beverage sales;

management and franchise services with fees

and royalties revenue; and revenue generated

from the selling of residential real estate.22

According to IBISWorld’s report on hotels and

motels in the U.S., 75.3 percent of revenues

come from rentals of hotel and motel rooms,

followed by 12.5 percent of industry revenue

food and beverage sales, and 4.2 percent from

conference room rentals.23

The industry is very capital-intensive for hotel

owners, as large upfront investments in

buildings, fixtures and equipment are necessary

to operate large hotel facilities.24 The per-room

cost of construction varies from $65,200 for

budget hotels to $598,500 for luxury hotels

and resorts.25

This high level of capital intensity has led to

some consolidation amongst the largest

operators. As mentioned earlier, some

companies have also started to transition their

business models away from direct property

ownership, favoring a hotel management

structure via franchising and third party

property ownership agreements that seek to

limit the amount of upfront capital and

maintenance costs necessary in direct

ownership. Typically, hotels that offer

franchisee agreements will maintain standards

for building upgrades, and provide

specifications for furniture and fixtures in order

to maintain their brand image.26 While this

model lowers overall revenues for franchisors, it

has allowed companies to reduce property-

related costs and generate higher profit

margins.27

The internet has had a significant impact on the

structure and dynamics of the industry. Online

reservations increase the need for data security,

since systems can be hacked to access sensitive

information about customers. While the

industry benefits from increased exposure

through online travel websites, competition is

also fiercer, as consumers can easily compare

prices and services online. The plethora of

reviews on online travel booking sites like

Priceline, Kayak, and Hotels.com has enabled

customers to choose hotels with high quality

services, and avoid those with poor

management practices. Travel site fees may also

increase the overall booking cost of hotel

rooms, reducing the demand for rooms.

Meanwhile, increased price transparency can

broadly drive down room prices across

proprietary hotel booking websites and online

travel agency platforms.

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At the same time, hotels are able to increase

occupancy by releasing vacant rooms at large

discounts on short notice.28

The internet has also greatly facilitated market

penetration through widespread lower-cost

marketing and ease of purchase. In this

environment, smaller operators with limited

marketing budgets are better able to compete,

as are nontraditional lodging operators. One

example is Airbnb, a social platform that

aggregates available accommodations from

private home owners, which garnered 10

million global users in its first five years of

existence.29 For both new and established

market participants, the internet has cut costs

and streamlined marketing, information

gathering, reservation management, and supply

purchase. Furthermore, operators are able to

assess customer preferences and target their

marketing across a variety of platforms.30, 31

Due to the international scope and physical

infrastructure requirements of hotel operations,

key related sustainability trends and the

regulations outlined in the following section are

linked to the industry’s long-term growth

prospects and risk profile. Industry analysts

typically look at revenue per available room

(RevPAR), occupancy rates, and the number of

new rooms added, to gauge a company’s

financial performance and outlook.32

In developing this briefing and determining

material disclosure topics and accounting

metrics for Hotels & Lodging companies, SASB

used a “pure-play” definition of the industry,

and considered that many Hotels & Lodging

companies do not provide food and beverage

services. The issues discussed here, therefore,

focus on the lodging facilities of Hotels &

Lodging companies, rather than their

preparation of food and beverages.

SASB treats the following industries

separately: Hotels & Lodging and Restaurants.

While this approach is necessary to ensure a

coherent understanding of industry drivers

and challenges, it does not always reflect the

current structure of the industry, where some

Hotels & Lodging companies are sometimes

directly involved in food and beverage

preparation.

Therefore, depending on the specific activities

and operations of Hotels & Lodging

companies, sustainability issues and

accounting metrics associated with the

Restaurants industry may also be material for

them.

NOTE ON INDUSTRY STRUCTURE

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LEGISLATIVE AND REGULATORY TRENDS IN THE HOTELS & LODGING INDUSTRY

The Hotels & Lodging industry faces numerous

forms of regulation surrounding the operating

of large buildings and treatment of workers.

The following section provides a brief summary

of key regulations and legislative efforts related

to this industry.II

Adherence to regulations on food preparation,

liquor service, and health and safety on-

premises are among the industry’s most

significant. They directly impact customers’

experience, and protect operators from liability

risk. The American Disabilities Act (ADA)

requires public hotels to provide policies and

procedures for accommodating disabled

persons. In March 2012, new regulations within

Title III of the ADA imposed standards for newly

constructed facilities, including the

configuration of guest bathrooms, access

requirements, and the processing of

reservations for disabled guests.33 Other

regulations specific to the industry include the

Hotel & Motel Fire Safety Act and the Pool and

Spa Safety Act. To meet the requirements of

the Fire Safety Act, a hotel or motel must have

smoke alarms in each guestroom and in

properties with four or more stories they also

must have an automatic fire sprinkler system in

each guest room. Noncompliant properties risk

II This section does not purport to contain a comprehensive review of all regulations related to this industry, but is

losing federal government travel and

conference business.34

There are various incentives and regulations

around the world that encourage hotels and

other commercial buildings to reduce indirect

greenhouse gas emissions and improve

resource efficiency. In Japan, the Ministry of

Environment provides incentives for integrating

highly efficient energy systems into building

projects.35 In Barbados, properties that upgrade

to achieve Green Globe certification may claim

a tax writeoff of up to 150 percent of costs.

Apart from incentives, government mandates

or cost drivers also require companies to focus

on energy efficiency and renewable energy. The

German Renewable Energy Heating Law

requires newly constructed buildings to source

part of their heating energy needs from

renewable energy sources.36 In the U.S., state

level legislation like California’s AB32 and the

Regional Greenhouse Gas Initiative regulates

carbon emissions. These may indirectly impact

hotels in the region through higher utility rates.

Additionally, in the U.S., voluntary green

building standards, such as the United States

Green Building Council’s (USGBC) Leadership in

Energy and Environmental Design (LEED) are

being utilized throughout the hotel industry to

improve building energy and water efficiency.

These programs have the opportunity to reduce

the hotel industry’s carbon and environmental

footprint while providing a basis for lower

intended to highlight some ways in which regulatory trends are impacting the industry.

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operating costs over the lifespan of the

buildings.37

The U.S. Department of Labor Occupational

Safety and Health Administration (OSHA)

assures safe and healthful working

environments and conditions.38 For example,

hotels are required to keep walkways, working

surfaces, storerooms, and service rooms clean

and free of obstructions, which abates the risk

of accidents for not only employees, but also

guests.39

The American Hotels and Lodging Association is

a proponent of immigration reform. The

Association’s website highlights the need for

immigrant workers in the industry: “the supply

of American workers suitable for such work

continues to fall because of an aging workforce

and rising education levels.”40 Immigration

reform that provides a pathway for

undocumented workers and others to obtain

work visas, to ease the increasing shortage of

hospitality workers, would likely benefit the

industry.

Given the industry’s international scope and

plans for growth, companies face additional

risk from navigating a range of local customs

and regulations that are different from

domestic requirements. As a result, the cost of

operations and compliance will vary according

to local regulation. However, some domestic

legislation, such as the U.S. Foreign Corrupt

Practices Act, is far-reaching and prohibits

unlawful payments to government officials

abroad in order to obtain or retain business.

SUSTAINABILITY-RELATED RISKS AND OPPORTUNITIES

Industry drivers and recent regulations suggest

that traditional value drivers will continue to

impact financial performance. However,

intangible assets such as social, human, and

environmental capitals, company leadership

and governance, and the company’s ability to

innovate to address these issues are likely to

increasingly contribute to financial and business

value.

Since tourism often happens in emerging

economies and ecologically sensitive areas and

hotel facilities are relatively resource-intensive,

the industry can create a lasting impact on the

environment and community in which it

operates. Developing countries and smaller

communities may not have the infrastructure

needed to respond to the demand of resources

from hotels and their guests, and local

resources that may already be in short supply

undergo great pressure.41 Furthermore, local

laws may not provide adequate protection to

workers. In these contexts, sustainability is

often driven by operators’ policies.

Broad industry trends and characteristics are

driving the importance of sustainability

performance in the Hotels & Lodging industry:

• Resource intensity: Hotel operations

often require sizeable, stable sources of

water and energy. Conservation is an

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important method to reduce costs and

operational risk. Risks are heightened in

areas of water stress or heavy fossil fuel

reliance.

• Ecosystem externalities and

responsible lodging: Preserved but

accessible ecosystems drive

environmental practices for the

industry. Degradation of such

ecosystems through hotel operations,

or macro trends, such as rising sea

levels as a result of climate change,

could affect the value of hotel

properties and future operations.

Together with consumer preferences,

this is driving an industry

transformation towards

environmentally and socially sustainable

travel and lodging.

• Use of human capital: The industry is

reliant on human capital to ensure a

good customer experience by providing

cleaning, cooking, and other guest

services that determine much of the

quality of a guest’s stay. Treating

workers fairly may not only improve

worker satisfaction and turnover, but

also improve their interactions with

guests.

As described above, the regulatory and

legislative environment surrounding the Hotels

& Lodging industry emphasizes the importance

of sustainability management and performance.

Specifically, recent trends suggest a regulatory

emphasis on environmental and customer

protection, which will serve to align the

interests of society with those of investors.

The following section provides a brief

description of each sustainability issue that is

likely to have material implications for

companies in the Hotels & Lodging industry.

This includes an explanation of how the issue

could impact valuation and evidence of actual

financial impact. Further information on the

nature of the value impact, based on SASB’s

research and analysis, is provided in Appendix

IIA and IIB. Appendix IIA also provides a

summary of the evidence of investor interest in

the issues. This is based on a systematic analysis

of companies’ 10-K and 20-F filings,

shareholder resolutions, and other public

documents. It is also based on the results of

consultation with experts participating in an

industry-working group convened by SASB.

A summary of the recommended disclosure

framework and accounting metrics appears in

Appendix III. The complete SASB standards for

the industry, including technical protocols, can

be downloaded from www.sasb.org. Finally,

Appendix IV provides an analysis of the quality

of current disclosure on these issues in SEC

filings by the leading companies in the industry.

ENVIRONMENT

The environmental dimension of sustainability

includes corporate impacts on the environment.

This could be through the use of natural

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resources as inputs to the factors of production

(e.g., water, minerals, ecosystems, and

biodiversity) or environmental externalities and

harmful releases in the environment, such as air

and water pollution, waste disposal, and GHG

emissions.

The Hotels & Lodging industry has substantial

demands on natural resources due to its large

physical infrastructure and operating

requirements. Managing resources efficiently,

particularly water and energy, is not only

important for reducing environmental impacts,

but can also affect industry profitability via

impacts on operating costs. Energy

consumption can directly or indirectly

contribute to externalities such as climate

change and local air pollution, whereas water

withdrawals from water-stressed areas have

significant environmental and social

consequences.

The protection of ecosystems and adaptation to

climate change are an increasing concern for

the Hotels & Lodging industry. This is

particularly true in environmentally sensitive

areas, as well as locations that are susceptible

to extreme weather events, such as flooding

and hurricanes. Companies that operate large

hotel resorts in coastal areas may be at greater

risk from inclement weather, flooding, and

beach erosion as a result of climate change and

rising sea levels, potentially leading to

uninsurable buildings and decreased tourist

traffic. Additionally, hotels can contribute to

the decline of local ecosystems from the

operations of large buildings, as well as tourism

activities, which can threaten environmentally

sensitive areas.

Hotel guests are increasingly concerned with

the concept of sustainable or responsible travel;

i.e., how hotels are working to minimize

negative impacts on biodiversity, the

environment, and communities. Brand value

might increasingly be affected by performance

on resource efficiency, as well as the industry’s

efforts to protect ecosystems and the interests

of local communities.

Energy & Water Management

Energy and water management are of

particular relevance to hotel and lodging

companies, due to their relatively large

consumption of, and dependence on, these

resources. Energy is used primarily in heating,

ventilating, air conditioning, water heating,

lighting, kitchens, and laundry. Water is

primarily consumed in restrooms, kitchens,

landscaping, and laundry.42 While these are not

the industry’s greatest operating costs,

substantial price increases or reduced water

availability could significantly impact financial

results or even the ability to operate.

Various sustainability factors are leading to an

increase in the cost of conventional energy

sources and are making alternative energy cost

competitive. These factors include: Greenhouse

Gas Emissions (GHG) emissions pricing,

incentives for energy efficiency and renewable

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energy, and risks associated with nuclear

energy and its increasingly limited license to

operate. Therefore, it is becoming increasingly

material for companies in energy-intensive

industries to manage their overall energy

efficiency, their reliance on different types of

energy and the associated risks, and their

access to alternative energy sources. The

industry has some potential to utilize renewable

forms of energy in operations that may help to

offset energy price increases. Furthermore,

water is becoming a scarce resource around the

world due to increasing consumption. This

increase comes as a result of population

growth and rapid urbanization, as well as

reduced supplies due to climate change. Many

important river basins can already be

considered “stressed.” Water scarcity can result

in higher supply costs, supply disruptions, and

social tensions that hotel brands may need to

contend with.

Companies that can simultaneously maintain

standards of service quality and improve water

and energy efficiency can reduce operating

costs and lower risks presented by long-term

resource availability constraints. Additionally,

energy and water management programs for

franchised locations may help to boost

efficiency and profitability, making franchises

more attractive for owners while also improving

the entire hotel brand’s reputation.

Company performance in this area can be

analyzed in a cost-beneficial way internally and

externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

• Total energy consumed, percentage

grid electricity, percentage renewable;

and • Total water withdrawn, percentage

recycled, and percentage in water

stressed regions.

Evidence

Energy costs comprise between 3 and 6 percent

of industry operating costs, while water

represents roughly 10 percent of utility

costs.43, 44 Water used in the lodging industry

accounts for approximately 15 percent of the

total water use in commercial facilities in the

U.S.45

In its FY2012 Form 10-K, MGM Resorts, which

manages casino hotels, provides channels of

financial impact on its business from rising

energy costs, stating: “(O)ur business is

particularly sensitive to energy prices (…) We

are a large consumer of electricity and other

energy and, therefore, higher energy prices

may have an adverse effect on our results of

operations.” In the U.S., the average retail price

of electricity for the commercial end-use sector

has gone from 7.25 cents per kilowatt-hour

(kWh) in 2001 to 11 cents per kWh in 2014.46

The U.S. Energy Information Administration

(EIA)’s long-term projections show that nominal

electricity prices paid by the commercial end-

use sector will increase to around 18.5 cents

per kWh by 2040 in the reference case,

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representing an increase of 2.4 percent

annually.47

Energy management projects can generate

large cost savings and are becoming

increasingly important with rising commercial

energy prices. Water management can yield

similar results in the face of rising water costs

in some regions. The American Hotel and

Lodging Association (AHLA) has produced 14

guidelines on operating greener hotel

businesses with substantial annual cost savings.

Calculations based on a hypothetical 300-room

facility forecast annual cost savings of nearly

$23,000 for efficient interior lighting, and over

$35,000 from water-efficient showerhead

installation. Savings can be considerable for

companies with multiple facilities, and

additional energy and water efficiency

initiatives can add to potential savings.48, 49

InterContinental Hotels Group (IHG), a UK-

based hotel chain, launched an energy

management program known as IHG Green

Engage. This tool provides hotels a method to

track energy and water usage, allowing them

to see how much money they are spending and

saving, while feeding data directly to IHG’s

corporate office. The company plans to launch

the program across its global base of 4,700

hotels. This program already saved the

company over $73 million in 2013 alone.50 In

2012, Hilton Worldwide achieved a five-year

goal of reducing water consumption by 10

percent and waste output by 20 percent. It also

sought to reduce energy consumption and

emissions by 20 percent by the end of 2013. Its

energy efficiency projects have resulted in more

than a quarter-billion dollars in savings since

2009.51

Marriott International, one of the world’s

largest hotel chains, adopted a five-year

energy-saving program with Constellation

Energy, a major utility, in 264 hotels in the U.S.

in 2011. The program is expected to generate

$9.9 million in revenue and savings for

franchise hotel owners and Marriott. These

revenues and savings stem from reduced

energy costs and energy demand incentive

payments over the life of the program.52

In its Form 10-K, Marriott International

discussed its goal of reducing water and energy

consumption by 20 percent by 2020. A method

for achieving this goal includes the use of a

proprietary Energy and Environmental Action

plan tool that helps the company monitor and

audit its facilities for energy and water

consumption. Furthermore, in 2011, the

company partnered with the United States

Green Building Council to develop the LEED

Volume Program that facilitates the green

building certification for the hospitality industry

by creating a green hotel prototype. This

energy and water improvement program can

help hotel owners save over 25 percent in

energy and water consumption over the entire

life of the building, with an initial payback

period of between two to six years.53

Additionally, for franchised locations, Marriott

operates an “Architecture and Construction”

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division that “provides design, development,

construction, refurbishment, and procurement

services to owners and franchisees of lodging

properties on a voluntary basis.” This could

help them improve the energy and water

management at non-owned locations.54

Hotel owners and operators have also begun to

incorporate renewable energy sources into

some locations to save energy and attract eco-

conscious guests. In 2009, the Hyatt Regency in

New Brunswick, New Jersey installed a 421-

kilowatt solar panel system on the roof of the

hotel’s garage. The system is expected to

reduce CO2 emissions by over 10,000 tons over

30 years.55

Beyond costs savings, research conducted by

Cornell University suggests that LEED-certified

hotels also generate more revenue per room on

a daily basis compared to noncertified hotels.

That was true across hotels of all types.56

Consumer preferences for sustainable lodging,

as well as financial risk from the interaction

between hotel operations and their social and

natural environments, stress the importance of

this sustainability issue. For example,

TripAdvisor’s 2013 global survey of over 15,000

consumers and 19,000 businesses found that

79 percent of travelers consider eco-friendly

accommodation practices important to their

choice of lodging. Furthermore, there is interest

on the part of hotel operators. The survey

revealed that roughly 85 percent of U.S. hotel

operators currently utilize some form of

“green” practices.57

Value Impact

Companies in the industry are large consumers

of electricity and water, and are subject to

rising energy prices or water scarcity, with

potentially adverse impact on profitability.

Companies can minimize these risks either by

reducing overall energy and water consumption

and/or improving energy and water efficiency.

Proper management of resources will also likely

impact cost of capital since reliance on

unsustainable sources of energy and increasing

competition for water supplies in certain

geographies might pose long term risks to a

company’s profitability or continued operations

in these regions. Finally, the efficient use of

resources is likely to improve intangible assets

like brand image and reputation, which could

lead to higher revenues over time.

While the cost of energy consumption is

already captured in financial results, overall

energy consumption levels provide a sense of

firms’ exposure to possible future increase in

energy costs. Decisions about on-site versus

sourced electricity and diversification of energy

sources can also influence the volatility and

price of energy costs, with impacts on a

company’s long-term profitability and cost of

capital.

Total energy consumed provides an absolute

and comparative measure of energy efficiency.

The amount of reliance on grid electricity

indicates vulnerability to specific energy

sources, and gives a sense of the indirect

impact of costs from internalization of carbon

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prices by utilities. The amount of renewable

energy a company uses indicates a firm’s ability

to mitigate its environmental footprint and its

exposure to energy cost increases.

Total water withdrawn provides absolute and

comparative measures of water efficiency. The

amount of recycled water used indicates a

company’s ability to mitigate its exposure to

water cost increases. The amount of water a

firm uses in in water-stressed regions indicates

its exposure to operational disruptions in the

short-term (revenue impacts) and operational

risks in the long-term (cost of capital).

Ecosystem Protection & Climate Adaptation

The Hotels & Lodging industry is also subject to

environmental externalities. The causes of these

externalities are largely outside of companies’

direct control, but can cause significant risks for

companies and the communities in which they

operate. Particularly, impacts from climate

change, which may include more frequent or

intense inclement weather events and rising sea

levels, can damage buildings and local

ecosystems. They also present challenges to

communities reliant on tourism.

The setting up and implementation of

ecological protection and climate adaptation

plans to protect local ecosystems by hotel

operators is not only important for minimizing

costs and protecting revenues, but also has

implications for local communities that rely on

tourism in such areas. These communities could

face large socioeconomic losses in the absence

of such actions. Hotel and lodging companies

expressing leadership in the area of adapting to

climate change, by participating in coastal

renourishment programs and other means of

supporting and protecting local ecosystems,

can benefit from the value these ecosystem

services provide to their operations.

Additionally, actions protecting local

ecosystems are important since hotel facilities

themselves may impact local ecosystems

through their operations if they occupy large

tracts of land (including landscaped grounds),

or are located near sensitive habitats. Some

hotel facilities are highly dependent on local

natural attractions, such as coral reefs, to draw

tourists and other visitors, stressing the dual

nature of addressing environmental impacts

within the industry and its exposure to climate

change risk.

These issues can result in damaged and

uninsurable buildings as well as contribute to

the decline of tourist attractions that harm

industry operators. Company performance in

this area can be analyzed in a cost-beneficial

way internally and externally through the

following direct or indirect performance metrics

(see Appendix III for metrics with their full

detail):

• Number of lodging facilities located in

FEMA Special Flood Hazard Areas or

foreign equivalent;

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• Number of lodging facilities in or near

areas of protected conservation status

or endangered species habitat; and

• Description of environmental

management policies and practices to

preserve ecosystem services.

Evidence

Approximately 80 percent of all tourism takes

place in coastal areas, often near beaches and

delicate coral reefs.58 Healthy ecosystems,

particularly on the coasts, are closely linked

with the economic and financial performance

of local communities and businesses. Coral

reefs protect beaches from waves that can

cause erosion, as well as provide a source of

attraction for tourists.

An assessment by the International Union for

Conservation of Nature and Natural Resources

(IUCN) details the lodging industry’s ecological

impact on the Caribbean region. The majority

of hotels in the region are situated within 800

meters of the ocean, suggesting that coastal

locations are highly prized and valuable, due in

large part to natural attractions. According to a

World Resources Institute report on coral reefs

in the Caribbean, nearly one-third of the area’s

coral reefs are threatened by coastal

development. These threats include sewage

discharge, urban runoff, construction, and

tourist development. Additional human

activities such as overfishing and agricultural

runoff can further threaten these delicate and

important ecosystems.59 Beyond direct human

activity, coral reef degradation can also result

from natural causes, including rising sea levels

and temperatures and increasing ocean

acidification.60, 61

Disturbances to and degradation of the natural

environment will make travel destinations less

attractive and decrease room bookings.62

Therefore, the long-term growth of the

industry is increasingly linked to the adoption

of sustainable facility development and

operating standards that aim to protect

sensitive ecosystems.

A study of beach erosion in the Dominican

Republic due to coral reef degradation suggests

that local hotels could lose between $52 and

$100 million over the next decade due to beach

erosion.63 In Tobago and Saint Lucia, the direct

and indirect impact on the economy from coral

reef-associated tourism was estimated to be at

least $250 million combined. Therefore,

ensuring sustained life of coral reefs is in the

best interest of the local tourism industry and

hotel operators.64

Furthermore, establishing policies and actively

engaging with local stakeholders to minimize

the environmental impacts of construction

projects may reduce risks, particularly when

developing hotels in ecologically sensitive areas.

There have been some instances of halted hotel

and resort projects due to environmental

concerns. For example, in 2012, Mexican

President Felipe Calderon, cancelled the

construction of a 9,400-acre tourist resort in

Baja California, Mexico over concerns regarding

potential damage to a nearby marine reserve.

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Environmentalists had been protesting the

project for years, alleging that it would

threaten coral reefs which are home to more

than 200 fish species.65

Attention to ecosystem protection is also

relevant in the context of climate change

impacts. Communities dependent on tourism

and the many hotel resorts located near coastal

areas could face economic and social

challenges due to climate change and resulting

beach erosion and property damage, increasing

the importance of climate change adaptation.

Tourism in Hawaii is the state’s largest industry,

generating over $14 billion in annual economic

activity, with tourists coming to enjoy the

natural scenery and coastal beauty of area

beaches.66 Inclement weather and rising seas

may threaten the tourism industry in the region

by causing property damage and lost revenue

from fewer tourists. A 2008 economic impact

study on beach erosion of Waikiki Beach due to

rising sea levels concluded that hotels would

lose over $661 million in revenue, with local

communities losing over $2 billion in tourist

expenditures annually, due to full erosion of

the famous beach. This would result in the loss

of over 6,350 jobs in the area’s hotels. This

highlights just a small sample of the economic

risks the hotel industry would face due to

climate change.67

Therefore, hotel operators and communities in

coastal regions may find it beneficial to partake

in beach reclamation activities. In 2012, a

Waikiki Beach nourishment program was

supported by local area hotels and successfully

restored over 1,700 feet of the area’s beach.68

Additionally, hotels may face the risk of having

to abandon coastal properties or rebuild and

relocate to higher ground, which would lead to

significant losses and added costs.69 For

example, in Caribbean communities, it is

estimated that rebuilding of tourist resorts due

to coastal beach erosion from a hypothetical

sea level rise of one meter would cost the

industry between $10 and $23.3 billion in the

year 2050.70

As climate change impacts on coastal regions

increase, companies in the hotel industry may

be unable to insure buildings located in coastal

regions, or may face higher insurance

premiums. Some large insurance providers are

already limiting their exposure to areas

susceptible to inclement weather and flooding.

For example, Allstate has cut its homeowners

insurance exposure in Florida from 1.2 million

policies down to 400,000 after hurricanes

wiped out 75 years of profits for the insurer.

This issue of insurance availability is also

affecting the hotel industry in coastal regions.71

Extreme weather events, which are expected to

worsen as a result of climate change, have led

to increased insurance premiums for hotel

operators, particularly in coastal regions where

insurance has risen 8 to 10 percent annually on

average.72 Such events have the ability to not

only raise insurance premiums, but also

interrupt hotel power supplies and endanger

guests, which all lead to limiting the

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attractiveness of tourist locations susceptible to

such events.73 In September 2014, a Category 3

hurricane hit multiple resorts in Los Cabos,

Mexico where many guests were forced to

evacuate. The Starwood Hotels & Resorts hotel

and two Hyatt properties were the most

damaged, and were closed to guests for over a

month.74 This emphasizes the potentially

significant impacts extreme weather events

have on hotel operators and brands.

Hilton Worldwide recognized this risk in their

2013 Form 10-K, stating: “[t]he potential for

changes in the frequency, duration and severity

of extreme weather events that may be a result

of climate change could lead to significant

property damage at our hotels and other

assets, affect our ability to obtain insurance

coverage in areas that are most vulnerable to

such events, such as the coastal resort areas

where we operate, and have a negative effect

on revenues.”75

In order to protect shareholder value,

companies in the industry may be able to adapt

to climate change by participating in coastal

renourishment programs, while establishing

strict environmental policies for locations in

sensitive ecosystems to protect them from local

hotel operations and tourism.

Value Impact

Climate change and the impacts that

companies have on local ecosystems can affect

revenue and long-term growth in tourism areas

that rely on pristine natural environments.

Additionally, failure to protect sensitive

ecosystems may limit a company’s license to

operate and its ability to construct new hotels

in sensitive areas.

Hotels properties located in areas subject to

severe weather and beach erosion are also at

risk of property damage, potentially leading to

asset write-downs and capital expenditures to

restore property. Extreme weather events

related to climate change and ecosystem

degradation can also lead to operational

disruption. This risk can be exacerbated if

insurance for weather-related damage to

coastal properties becomes more difficult or

expensive to obtain.

Property and operating risks from climate

change could also increase cost of capital for

companies in the industry, in the absence of

adequate and proactive adaptation measures.

The probability and magnitude of impacts from

this issue are likely to increase in the medium-

to long-term as climate change impacts

intensify and public and regulatory focus on

ecosystem protection increases.

The number of properties located in Special

Flood Hazard Areas gives an indication of a

company’s exposure to the immediate risks of

climate change. The number of lodging

facilities located in or near protected

conservation areas or endangered species

habitats indicates a company’s reliance on

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ecosystem services and its exposure to

ecosystem-related risks.

HUMAN CAPITAL

Human capital addresses the management of a

company’s human resources (employees and

individual contractors), as a key asset to

delivering long-term value. It includes factors

that affect the productivity of employees, such

as employee engagement, diversity, and

incentives and compensation, as well as the

attraction and retention of employees in highly

competitive or constrained markets for specific

talent, skills, or education. It also addresses the

management of labor relations in industries

that rely on economies of scale and compete

on the price of products and services. Lastly, it

includes the management of the health and

safety of employees and the ability to create a

safety culture for companies that operate in

dangerous working environments.

The Hotels & Lodging industry relies on large

numbers of workers, many of them low-skilled.

In the U.S., low-skilled positions are often filled

by recent immigrants and where working

conditions can be difficult, requiring shifts

during all hours of the day, leading at times to

discontent among workers. 76 Yet, employee

morale is a key component of a guest’s

experience. Therefore, effective management

of human capital is critical for shareholder

value in the hospitality industry.

Fair Labor Practices

Tourism, including hotels and lodging, is labor-

intensive and many of the staff are low-skilled,

part-time, seasonal, or immigrant workers.

Globally, it is among the top job creators, and

is an entry point for youth, women, and

migrant workers to join the workforce.77

The gradual increase in U.S. workforce

education attainment has reduced labor

availability, as many are unwilling to accept the

lower wages and long hours common in the

hotel industry. As a result, a majority of the

U.S. hospitality industry workforce is composed

of women and minorities, many of whom are

recent immigrants. 78 Commonly, these workers

are mistreated and discriminated against when

it comes to wages and advancement

opportunities, which can lead to burdensome

lawsuits and low job satisfaction, contributing

to high turnover.

In addition, the industry is characterized by low

union participation, low wages, seasonality,

shift and night work, and low skill

requirements. The difficulty, seasonality, and

part-time nature of the work contribute to a

high turnover rate, which can add to the

already large cost of wages for the industry.

The issue is further complicated by the

structure of global chains that not only own,

but lease, manage, or franchise hotels under

these brands, often through various

international subsidiaries. A majority of hotel

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staff in franchised or managed hotels may be

employed by a third party.79 In addition, since

many chains exist across the globe, ensuring a

consistent human resources approach can be a

challenge.80

As the diversity of the workforce increases

within the industry, engaging and investing in

programs to improve fair treatment of workers

and improve their skills and understanding of

company values can help to improve their

satisfaction on the job, lower turnover, and

ultimately improve the customer’s

experience.81, 82

Company performance in this area can be

analyzed in a cost-beneficial way internally and

externally through the following direct or

indirect performance metrics (see Appendix III

for metrics with their full detail):

• Voluntary and involuntary employee

turnover for lodging employees; • Amount of legal and regulatory fines

and settlements from labor law

violations; and

• Average hourly wage for lodging

employees, by region, and percentage

earning minimum wage.

Evidence

There are currently 3.3 million workers in the

U.S. who make minimum wage, and of those,

55 percent are in the Leisure and Hospitality

industry, which includes hotels and leisure

service industries.83 In 2013, the

Accommodation industry employed

approximately 1.81 million people in the U.S. or

just over 1.1 percent of the U.S. total labor

force.84, 85 The hotels and restaurants industries

have a higher fraction of part-time workers

compared to other sectors,86 and labor

represents a major industry cost at

approximately a quarter of revenue.87

Wages are low across the board in the

hospitality industry. In June 2014, according to

the Bureau of Labor Statistics, nonsupervisory

employees in the Accommodation industry earn

$12.94 an hour and work 30 hours a week.88

This is comparable to the Food Service and

Drinking Place workers who, on average, make

$12.40 an hour and work 26.1 hours a week.89

By failing to properly address the fair

compensation of workers, the industry can be

exposed to, and targeted for, increased

minimum wage regulation, leading to

unplanned cost increases. For example, in

September 2014, the Los Angeles City Council

passed an ordinance that would raise minimum

wage for hotel workers to $15.37 an hour, one

of the highest in the nation. The new law will

cover hotels that operate more than 125 guest

rooms. This law specifically targeted hotel

workers in the area, as nearly 40 percent of

workers lived below the poverty line.90

While high turnover has become an accepted

industry norm, which averages about 50

percent for all hotel workers, it can have

negative outcomes, such as: decline in quality

of work, lack of worker loyalty, loss of skills,

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and high cost of training.91 Among the costs of

replacing a worker in this industry, up to 70

percent can come from lost productivity due to

inexperience of new employees.92 Based on

data from 33 properties in the U.S., researchers

at the Cornell University Center for Hospitality

Research found that turnover costs in the

hospitality industry were about $5,700 for low-

complexity jobs and $10,000 for complex jobs.

They also found that costs were higher for

hotels with higher capacity, higher occupancy,

and those that were upscale compared to

hotels with low capacity, low occupancy rates,

and those that were midmarket or lower. 93

Given the size of the chain, Marriott

unsurprisingly reported that a one percent

increase in employee turnover would cost the

company between $5 and $15 million per

year.94

Turnover can be attributable to a number of

causes. According to Consultants of Hospitality

Administrators International, a management

consultancy firm: it is a “well-known fact that

the overwhelming majority of people who leave

any hotel leave because of the way they are

treated every day.” The firm finds factors like

“(l)ack of appreciation, lack of teamwork and

the perception that the company doesn't care

about employees are consistently” among the

highest-rated reasons for low job satisfaction.95

Some key factors that lead to employee

satisfaction include: the overall work

environment, recognition and rewards, worker

level of responsibility, room for advancement,

and flexibility in work schedules.96 It is believed

that engaging employees helps to increase

worker productivity and satisfaction on the job,

which can translate into better customer

experiences and reduced employee turnover.97

Furthermore, women make up between 60 and

70 percent of the hospitality and tourism

workforce globally, and are more likely to

experience inequality, stress, and physical and

sexual harassment. According to the

International Labour Organization, “(u)nskilled

or semi-skilled women tend to work in the

most vulnerable jobs, where they are more

likely to experience poor working conditions,

inequality of opportunity and treatment,

violence, exploitation, stress and sexual

harassment.” They also suffer in terms of

having access to education and training, and

are paid 25 percent less within the sector, on

average, than male workers for comparable

skills. 98 Cultural and ethnic minorities also tend

to be overrepresented in the industry; however,

most are not able to rise to advanced

positions.99

This puts hospitality companies at risk for

discrimination lawsuits. Extended Stay Hotels

paid $75,800 in equitable relief for a lawsuit

filed by the U.S. Equal Employment Opportunity

Commission (EEOC) for pay discrimination of

female workers at a company hotel. In addition

to the fine, the hotel chain must provide annual

pay reports to the EEOC, and provide annual

training for employees on federal

antidiscrimination laws, placing a further

burden on the company.100 In 2002, The Mirage

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Hotel and Casino in Las Vegas paid $1.4 million

to settle a lawsuit brought on by the EEOC for

discriminating against the hiring of African

American and Hispanic workers.101 According to

the American Hotel & Lodging Association,

nearly 76 percent of properties out of 2,048

survey participants offered diversity and

inclusion training for staff and employees,

predominately on a monthly basis, to avoid

discriminatory practices.102 This investment in

diversity training can help to improve worker

job satisfaction as well as reduce the chance for

discriminatory practices. According to research

conducted by the Hilton College of Hotel and

Restaurant Management, the perceived positive

diversity climate has contributed to a reduction

in role ambiguity and conflict, as well as

increased job satisfaction for hotel managers.103

Value Impact

Successful employee engagement and fair

treatment of workers is likely to improve

employee morale and reduce turnover, which in

turn can lead to improved guest experiences,

with positive impacts on revenue and growth.

On the downside, mismanagement of the issue

can impact customer satisfaction and brand

value, especially when labor issues escalate in

the media. Unfair labor practices can also result

in worker strikes and generally confrontational

relationships with labor groups, with potentially

chronic impacts on company revenues and

market share.

High turnover rates and potential increases in

wage costs through outside influences such as

new minimum wage regulations can also

impact companies’ long-term cost structure. As

the industry is subject to laws and regulations

governing minimum wage requirements,

overtime, immigration, employee hiring and

termination labor practices can result in legal

actions from employees or regulators,

potentially resulting in extraordinary expenses

and contingent liabilities.

While overall turnover is high in the industry,

companies’ voluntary and involuntary staff

turnover rates indicate how well they are

managing their workforce compared to peers.

Involuntary turnover is a proxy for staff

engagement and a company’s ability to

maximize customer experience. The amount of

legal and regulatory fines and settlements from

labor law violations is a lagging indicator of

how well hotel and lodging companies have

been managing this issue. It also indicate the

probability and magnitude of the direct costs

associated with large penalties and fines and

remediation activities. The average hourly wage

for lodging employees provides a sense of how

companies are balancing maximization of

profits and investments with the wellbeing and

performance of customer-facing staff.

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satisfaction: The mediating effects of role ambiguity and conflict." Conrad N. Hilton College of Hotel and

Restaurant Management, Last modified June 03, 2013. Accessed December 5, 2014.

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I N D U S T R Y B R I E F | H O T E L S & L O D G I N G

iI N D U S T RY B R I E F | H O T E L S & L O D G I N G

APPENDIX I: Five Representative Hotels & Lodging CompaniesIII

COMPANY NAME (TICKER SYMBOL)

Marriott International (MAR)

Hilton Worldwide (HLT)

Starwood Hotels & Resorts (HOT)

Wyndham Hotels (WYN)

Hyatt Hotels (H)

III This list includes five companies representative of the Hotels & Lodging industry and its activities. This includes only companies for which the Hotels & Lodging industry is the primary industry, companies that are U.S.-listed but are not primarily traded Over-the-Counter, and for which at least 20 percent of revenue is generated by activities in this industry, according to the latest information available on Bloomberg Professional Services. Retrieved on October 1, 2014.

iiI N D U S T RY B R I E F | H O T E L S & L O D G I N G

APPENDIX IIA: Evidence for Sustainability Disclosure Topics

Sustainability Disclosure Topics

EVIDENCE OF INTERESTEVIDENCE OF

FINANCIAL IMPACTFORWARD-LOOKING IMPACT

HM (1-100)

IWGsEI

Revenue & Cost

Asset & Liabilities

Cost of Capital

EFIProbability & Magnitude

Exter- nalities

FLI% Priority

Energy & Water Managament 75* 96 1 High • • • High • Yes

Ecosystem Protection & Climate Adaptation

67* 71 3 Medium • • • High • • Yes

Fair Labor Practices 46 89 2 High • • High • Yes

HM: Heat Map, a score out of 100 indicating the relative importance of the topic among SASB’s initial list of 43 generic sustainability issues; asterisks indicate “top issues.” The score is based on the frequency of relevant keywords in documents (i.e., 10-Ks, 20-Fs, shareholder resolutions, legal news, news articles, and corporate sustainability reports) that are available on the Bloomberg terminal for the industry’s publicly-listed companies; issues for which keyword frequency is in the top quartile are “top issues.”

IWGs: SASB Industry Working Groups

%: The percentage of IWG participants that found the disclosure topic to likely constitute material information for companies in the industry. (-) denotes that the issue was added after the IWG was convened.

Priority: Average ranking of the issue in terms of importance. One denotes the most important issue. (-) denotes that the issue was added after the IWG was convened.

EI: Evidence of Interest, a subjective assessment based on quantitative and qualitative findings.

EFI: Evidence of Financial Impact, a subjective assessment based on quantitative and qualitative findings.

FLI: Forward Looking Impact, a subjective assessment on the presence of a material forward-looking impact.

iiiI N D U S T RY B R I E F | H O T E L S & L O D G I N G

APPENDIX IIB: Evidence of Financial Impact for Sustainability Disclosure Topics

Evidence of

Financial Impact

REVENUE & EXPENSES ASSETS & LIABILITIES RISK PROFILE

Revenue Operating Expenses Non-operating Expenses Assets Liabilities

Cost of Capital

Industry Divestment

RiskMarket Share New Markets Pricing Power

Cost of Revenue

R&D CapExExtra-

ordinary Expenses

Tangible Assets

Intangible Assets

Contingent Liabilities & Provisions

Pension & Other

Liabilities

Energy & Water Management • • •

•

•

Ecosystem Protection & Climate Adaptation

• • • • • • •

Fair Labor Practices • • • • •

H IGH IMPACTMEDIUM IMPACT

ivI N D U S T RY B R I E F | H O T E L S & L O D G I N G

APPENDIX III: Sustainability Accounting Metrics | Hotels & Lodging

TOPIC ACCOUNTING METRIC CATEGORYUNIT OF MEASURE

CODE

Energy & Water Management

Total energy consumed, percentage grid electricity, percentage renewable

Quantitative Gigajoules (GJ), Percentage (%)

SV0201-01

Total water withdrawn, percentage recycled, percentage in regions with High or Extremely High Baseline Water Stress

Quantitative Cubic meters (m3), Percentage (%)

SV0201-01

Ecosystem Protection & Climate Adaptation

Number of lodging facilities located in FEMA Special Flood Hazard Areas or foreign equivalent

Quantitative Number SV0201-03

Number of lodging facilities in or near areas of protected conservation status or endangered species habitat

Quantitative Number SV0201-04

Description of environmental management policies and practices to preserve ecosystem services

Discussion and Analysis

n/a SV0201-05

Fair Labor Practices

(1) Voluntary and (2) involuntary employee turnover rate for hotel staff

Quantitative Percentage (%) SV0201-06

Amount of legal and regulatory fines and settlements associated with labor law violations*

Quantitative Number, U.S. Dollars ($)

SV0201-07

Average hourly wage for hotel employees, by region; percentage of staff earning minimum wage

Quantitative U.S. Dollars ($), Percentage (%)

SV0201-08

*Note to SV0201-07: Disclosure shall include a description of fines and settlements and corrective actions implemented in response to events.

vI N D U S T RY B R I E F | H O T E L S & L O D G I N G

Hotels & Lodging

Energy & Water Management

Ecosystem Protection & Climate Adaptation

Fair Labor Practices

APPENDIX IV: Analysis of SEC Disclosures | Hotels & Lodging

The following graph demonstrates an aggregate assessment of how representative U.S.-listed Hotel & Lodging companies are currently reporting on sustainability topics in their SEC annual filings.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TYPE OF DISCLOSURE ON SUSTAINABILITY TOPICS

NO DISCLOSURE BOILERPLATE INDUSTRY-SPECIF IC METRICS

96%

71%

89%

IWG Feedback*

*Percentage of IWG participants that agreed topic was likely to constitute material information for companies in the industry.

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