Sustainable Hospitality Insights | |
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What is the outlook for sustainable hospitality in 2025?
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As we look forward to 2025 with a mixture of excitement and trepidation, it is not 100% clear what the coming year will bring for the hospitality sector. Political uncertainty is high with a new US President to be inaugurated next week, German elections pending and an uncertain future for the French government, which together contribute to a lack of leadership from Europe.
In summary, although we expect to see some continued rowing back from overt “wokery” and terms like ESG (with its negative connotations, particularly in the US) in 2025, we expect the underlying drivers of sustainability in the hospitality sector to remain robust, with management teams continuing to make sensible, proportionate decisions in the long-term interests of their businesses:
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Globally, real estate and hospitality businesses need to invest far more time and effort in granular, asset-level data-collection to enable data-informed decision-making. Otherwise, Boards will continue to fly blind.
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We are likely to see a greater emphasis on investment and maintenance of operating assets (refurbishment), to maintain the value of assets, manage the risk of stranding and deliver operational savings (effective stewardship).
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For owners, the focus should be on decarbonisation of their real estate and hospitality portfolios to reduce their carbon footprint - improving efficiency, managing waste streams and reducing operating costs.
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And in Europe, a focus on regulatory reporting based on high quality, asset-level data. The timelines for CSRD reporting and EU Taxonomy remain unchanged, with increasing numbers of businesses steadily drawn into the net each year over the next few years.
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Our thoughts are set out in more detail below:
Sustainability remains a priority, even though the drumbeat may be quieter. Over the past year, we’ve seen a notable shift in industry rhetoric. Reacting to the political divide, asset management firms have become more discreet in communicating their sustainability programs compared to 18 months ago. A clear distinction has emerged between companies for whom sustainability is integral to their operations and those that approach it as a box-ticking exercise. For 2025, the focus will remain data-driven, with regulation, compliance and decarbonisation key drivers.
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There is a clear focus on climate resilience: the body of evidence for man-made climate change is now all-but-irrefutable – the destruction of the wildfires in Los Angeles are just the latest manifestation, adding to the increasing prevalence of extreme weather events around the world – flooding, storms and droughts. The increasing frequency of extreme weather events highlights the necessity for climate-resilient buildings. Climate risk is already increasing insurance costs in the built environment (Florida, California and indeed across the UK) and will have an increasing impact on location decisions, valuations and financing over the coming years. Climate risk mitigation and adaptation is an urgent priority.
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Inflation is expected to fall further in 2025, having peaked at 10.6% in the Euro area in October 2022, before falling back in 2023-24. Investors are hopeful that inflation and interest rates will continue to come down around the world, but this depends critically on US policy. Interest rates could remain higher for longer than initially anticipated if inflation is stubborn.
Market participants anticipate a potential return of real estate M&A, potentially from as early as Q225 once a few more Unknowns become better Known. CBRE forecasts a nearly 15% increase in European real estate investment activity in 2025. M&A in the real estate sector is poised for growth, however geopolitical risk is likely to continue to restricting capital flows into the sector in Q1 2025. Yet, downside issues remain as payroll remains a key driver of inflation and expenses remain elevated, due in part to labour costs and ongoing materials shortages. Together with the prospect of refinancing deals as lenders seek to unwind positions rolled over since COVID, there is the potential that distress – or at least, market dislocations – might appear.
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Institutional investors are increasingly shying away from assets with a risk of stranding, deflating the price of under-invested assets and steadily leading the market away from “brown” projects. JLL has suggested that “For many, the decision remains between upgrading or selling at a discount”. | |
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This could result in a scarcity of “assets to satisfy both value-add investors and occupational requirements, [so] we could soon see capital expenditure extend beyond prime locations and opportunities." If you can’t sell, then refurb to extend the commercial life of the asset. | |
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Travel demand remains robust, driven by both leisure and business segments, as consumers prioritise experiences. The hospitality sector in the UK and Europe has proven resilient in the face of a mixed economic outlook for 2025 (rising operational costs, supply chain challenges and regulation). PGIM has indicated that the strong recovery in travel demand and subdued supply is driving expectations for ongoing growth in revenue per available room (RevPAR) across all of Europe in 2025. The anti-tourism protests seen in 2024 and resistance to Air B&B may even have a positive upside for institutional hospitality investors. If you own a hotel in a market where supply growth is restricted, it creates a barrier to entry and underpins your asset long term. Despite economic uncertainties, the US hospitality outlook remains promising as a Trump-fuelled market boom and lower interest rates drive investment and expansion.
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In the Middle East, Saudi Arabia remains the focal point for hospitality growth as it develops its tourist offering under Vision 2030. This programme, with Sustainability a key pillar, is intended to generate jobs and diversify the economy away from its reliance on oil. More mature hospitality markets across the GCC, including the UAE, Qatar, Oman and other GCC states are also starting to embed sustainability, led by government pressure and the expectations of international tourists. Across the GCC, the “S”, the social aspects of ESG (for example, heritage, culture, community engagement, job creation and accessibility) remain key focus for the region for 2025 and beyond.
In terms of sustainability regulation, whilst the EU benefits from a cohesive regulatory approach, the US landscape remains fragmented, with varying standards across cities and states. Despite an expected rowing back of regulation at the federal level, this patchwork of state and city level legislation will persist. The lack of a unified national approach makes compliance challenging, so investors need to stay focused on ESG data collection, compliance and reporting.
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Introducing Con-Serve’s Investment Plan/CRREM functionality | |
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Last year, we were excited to introduce Con-Serve™ 2.0, the latest version of our ESG data intelligence platform, developed in collaboration with Deepki. This partnership combines our in-depth knowledge of sustainability in the hospitality sector with Deepki’s expertise in real estate and tracking utility performance, resulting in a platform tailored to meet the industry’s unique needs.
As part of our 2025 newsletter series, we will take a closer look at one of Con-Serve™’s features in each edition, offering practical insights into how the platform can help turn sustainability goals into actionable results.
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This quarter, we are focusing on:
The Investment Plan - a key tool designed to turn data into meaningful action
You can see the feature in action here.
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The Investment Plan offers a clear overview of planned sustainability initiatives, whether you are looking at your entire portfolio or focusing on a specific property. It enables you to plan and project savings associated with measures such as improving insulation, replacing chillers, installing building management systems (BMS), or adopting renewable energy solutions. The platform visualises the impact of these initiatives, allowing you to measure progress against energy and carbon reduction goals. Crucially, the Investment Plan is integrated with a location and industry-specific CRREM pathway—a benchmark aligned with the 1.5°C warming target of the Paris Agreement—so you can ensure your efforts are in line with global climate commitments.
In addition to tracking progress, the Investment Plan helps highlight risks, such as “stranding risk” against the CRREM pathway. This means identifying properties that are falling behind benchmarks and may require significant investment to bring them back on track. Armed with this insight, you can prioritise impactful actions, make informed decisions about resource allocation, and ensure your portfolio remains resilient—both environmentally and financially.
We look forward to sharing more about Con-Serve™’s capabilities in upcoming newsletters, showcasing how it is driving sustainability in the hospitality sector and supporting measurable progress.
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As part of a broader Middle Eastern client tour, Léa Jacquot Benson, Sustainability Manager at Considerate Group, headed to Dubai last November to attend the Skift Global Forum East and the first Gulf edition of the International Women in Travel Tourism Forum (IWTTF).
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Léa said: “The Skift Forum offered a deep dive into the innovation reshaping travel in the Middle East. From emerging as a global hub to balancing heritage with sustainability, conversations with key players including Red Sea Global, Qiddiya and Dubai Corporation of Tourism were refreshing and inspiring - with exceptional words of wisdom from Lina Annab, Jordan Ministry of Tourism and Antiquities”. | | | |
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As a membership club for real estate investors, the GRI Club attracts a high calibre of senior representation from across the UK and European real estate investment community. Together with a few hundred senior representatives from European banks and alternative lenders, private equity investors, secondaries and special situations funds, Considerate attended GRI Credit Opportunities & RE Debt 2024 at the Four Seasons on Park Lane. As part of an assessment of the state of the market (real estate capital allocations, credit and debt finance markets), discussions included lending appetite, the direction of rates, project margins and the direction of the global economy in 2025. | |
Integrated within the broader Hospitality Show, over three days the WSHA hosted almost 100 senior leaders across the hospitality industry. Considerate presented on “2025 and beyond.... utilising metrics and shaping data best practice in the hospitality sector”, focused around ESG data platforms and data best practice. The subsequent panel session included expert insight from Megan Brumagim, VP, Upscale Brands & CSO at Choice Hotels, Ryan L. Butler, Corporate Director, Sustainability + Energy at PM Hotel Group, Marianne Balfe, VP of Sustainability at Highgate (US/European hotel owner and operator) and JoAnna Abrams, CEO at MindClick. | |
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With Considerate’s support, the WSHA launches the World Academy | |
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We are delighted to have supported our long-term partner, the World Sustainable Hospitality Alliance (WSHA), in the development of the newly launched World Academy for Sustainable Hospitality.
This pioneering online learning platform is designed to equip hospitality teams with the tools and knowledge to translate the sector’s ambitious Net Positive vision into actionable change. Built in response to the industry’s call for a holistic, practical training resource, the Academy delivers tailored sustainability training for every hotel department – from front-line teams to C-suite leaders – and serves as a catalyst for behavioural change across the sector.
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Drawing on our deep expertise in sustainable hospitality, Considerate Group contributed to the content of several training modules, further building on our earlier collaboration with the WSHA on the HCMI methodology and the Pathway to Net Positive Hospitality framework.
Together, we’re empowering the industry to make sustainability a shared priority and a tangible reality. Find out more
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Having supported our clients to make hospitality more sustainable for more than 12 years already, the team at Considerate remains committed to providing the ongoing support hospitality owners and operators need to thrive in an evolving environment.
We wish all our clients and partners a successful year in 2025 and we look forward to partnering with you on your sustainability journey.
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To see Considerate’s full range of services, Click Here
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Email: Info@considerategroup.com
Office: +44 20 3865 2052
5 Merchant Square, London W2 1AY
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