a New Chapter for the Hotel Industry

The circular economy offers hotels a path to adopt sustainable practices, enhancing both their efficiency and guest experiences.

It’s no secret that sustainability has become a critical concern for industries and sectors worldwide in recent years, particularly following the COP28 summit.

The hotel and hospitality industry, in particular, has found itself at a proverbial crossroads, with its substantial environmental footprint and resource-intensive operations.

To say that the industry is facing pressure to adopt more eco-friendly practices would be a huge understatement.

Enter the concept of circularity – a business model approach that proposes to alter how companies operate drastically, consume resources and manage waste.

The circular economy model is beginning to gain traction in industries everywhere and is even being endorsed heavily by global institutions like the European Union, as countries strive to achieve climate neutrality (net zero) targets.

The concept of a circular economy requires numerous moving parts, but it can undoubtedly offer a framework of inspiration for hotels and hospitality businesses to significantly rethink their consumption and waste practices. There is even reason to believe that it can improve their bottom line, considering evolving consumer behaviours.

So let’s find out how the hotel industry can benefit by embracing circularity, the barriers towards a successful circular economy for supply chains, and what the future looks like.

Understanding circularity in hotels

The simplest way to explain a circular economy – in a hotel environment – is to think of it as a model that ensures hotels are not detrimental to the environment.

By rethinking all aspects of a hotel’s operations, from procurement, energy use, and technology integration to waste management, guest experiences, and finances.

The shift towards circularity can be pinpointed to broad, evolving consumer trends.

A recent impact report from electronics e-commerce retailer MPB reveals that over 70% of consumers bought or sold used goods in 2023, with millennials and Gen Z driving the trend for eco-conscious purchasing.

The growing acceptance of the ‘pre-loved’ market presents an opportunity for businesses sector-wide to rethink their procurement strategies and tap into a circular economy for not just electronics and technology, but other vital hotel assets.

The caveat is that hotels have had it tough recently, with long-term post-COVID fallout, rising inflation, soaring fuel costs exacerbated by geopolitical conflicts, and cost-of-living pressures which have made consumers more cautious about their outgoings. 

It can be argued that there is no better time to embrace a circular model which optimises all of these aspects while keeping the all-important factors of costs and customer experiences intact, and ultimately lessens a hotel’s environmental impact.

While many hotels and hospitality businesses have had to adapt profoundly given increased global pressure, here is just a snapshot of the industry’s broad environmental impact:

• It accounts for 15% of UK greenhouse gas emissions (GHGs).
• It generates 920,000 tonnes of food waste every year.
• Hotels contribute about 1% of global carbon dioxide emissions (363 million tonnes).

While not indicative of the entire picture, these statistics illustrate the urgent need for change. As many hotels and hospitality businesses still operate under a growth-focused, linear business model, there’s no better time to rethink this approach. The more businesses that adapt to alternative models that encourage circularity among their resources, products, and waste, the better it will be in the long run for the industry as a whole. 

Key areas for implementing a circular approach 

1. Waste management

Waste reduction is one of the most critical areas of measurement in a hotel’s circularity. The EU Sectorial Reference document for this sector has set a benchmark target of 0.6kg or under per guest per night, which many hotels are currently falling short of.

In order to overcome this, hotels should consider:

• Implementing stronger recycling programmes
• Partnering with local farms or food banks to donate excess food
• Replacing single-use items with durable and reliable alternatives 
• Composting organic waste from kitchens, gardens, and communal areas

2. Energy and water consumption

A circular economy can prove instrumental in reducing hotels’ energy and water usage, which are essentials but can – especially in recent years – eat up substantial amounts of a business’s budget.

Embracing circularity with these resources would be, at a starting point, installing energy-efficient lighting and appliances throughout the venue, using water recycling systems, and harnessing renewable energy sources like solar panels and air source heat pumps. 

As far as hotel management goes, smart building technology is becoming more accessible, with all these resource-intensive processes becoming more centrally managed. Hotel managers can therefore, with the help of technology, get a firmer grip on energy consumption and conservation.

3. Supply chains and procurement

Making procurement, logistics, and other vital supply chain activities more circular involves assessing multiple factors.

Hotels and hospitality businesses should identify the durability, repairability, longevity, and recyclability of all materials, products, and goods that they source, and consider how to optimise their procurement of perishable goods to also prevent further waste.

Fostering partnerships with more local suppliers and intermediaries will be a proactive workaround to reducing transport emissions while giving back to the local economy. If these suppliers demonstrate strong commitments to sustainability, cultivating an aligned ‘circular procurement’ policy throughout the supply chain will become easier.

The benefits of embracing circularity

Hotels can witness several short- and long-term advantages by embracing a circular business model, including (but not limited to):

• Cash flow improvements from reduced waste and optimised energy
• Lower operational overheads 
• Greater loyalty and experiences for more eco-conscious guests and customers
• Improved stakeholder and investor involvement
• Enhanced brand perception
• Compliance adherence
• Fewer regulatory penalties and fines for non-compliance
• A bolstered and more aligned workforce 
• Improved buyer-supplier relationships
• A more resilient supply chain
• The ability to handle bottlenecks and disruption with more confidence
• Staying ahead of the competition

Overcoming barriers to implementation

The benefits of circularity are abundantly clear, but the path for hotels to implement this across their operations is far from straightforward.

There are bound to be numerous obstacles, from the upfront investment costs of replacing legacy systems and processes to deploying new technologies and solutions which can take time to understand and learn. Ultimately, it’s a case of weighing up the short-term challenges with the long-term benefits and savings that hotels can reap as a result of the change.

It’s important to illustrate that circularity doesn’t exclusively refer to waste management; it’s a collaborative approach that affects the entire supply chain. Therefore, simply adding more recycling options isn’t enough, despite it being a positive step. Hotel and hospitality decision-makers must collaborate and communicate closely with their partners across the supply chain to find the optimal approach that can bring the best possible financial and environmental benefits.

Steps towards a circular future

To summarise, hotels and hospitality businesses should prioritise adopting a more circular approach across their estates, sooner rather than later. More businesses will begin adopting similar approaches in the coming months and years, which is why rethinking operations now will pay long-term dividends.

• Assess your current operations with an objective lens that can give you an idea of how intensive your resource usage and waste generation are.
• Establish measurable targets and goals for waste reduction, energy efficiency, and procurement. 
• Use tools like the United Nations Sustainable Development Goals (SDGs) as a framework.
• Ensure that your team – regardless of experience and seniority – understand circular economy principles and how they apply to their roles.
• Share your circular initiatives with guests, investors, stakeholders, and the public. Remember that transparency and accountability build trust.
• Identify areas where your competitors are lacking and how you can create a position for your hotel or hospitality chain.

Moving from concept to competitive advantage

The journey towards circularity in the hotel industry is getting clearer with each passing day, and the potential rewards for individuals, companies, and the wider sector make it a path worth pursuing. 

The key is to understand sustainability reporting and compliance as not explicitly a tick-box exercise, but as a vital component of your business strategy.

The circular economy is an attractive and viable proposition to help companies adopt a profitable and sustainable model that satisfies the need for environmental stewardship while recognising the importance of maintaining financial stability and consumer faith.

About the author: Annie Button is a freelance writer based in the UK. She specialises in business development, sustainability, digital trends, marketing, and HR.

This article originally appeared on Hotel Management Network.