‘Travel is a force for good': IHG's Karin Sheppard on creating its first zero carbon hotel

The hotel itself is going to be 142 keys and it's based in Exeter Science Park, which is a very appropriate location to do something rather outstanding. Zeal hotels has spent a lot of time researching and really understanding how to get to a net zero carbon hotel.

Zeal has worked on a number of initiatives that enable us to essentially offset the carbon emissions resulting from building the hotel in how it will operate afterwards. These include a range of technical measures, for example, photovoltaic panels on all sides of the hotel, and energy conservation measures.

Can you tell us more about how you will offset the emissions?

There's been a lot of work around the energy sources that will be used, in this instance photovoltaic panels, and in sourcing any energy that complements what's produced by the building itself from renewable sources.

Then it's about the use of the space and being really thoughtful about how the hotel is designed, such as having LED lights and zones which allow us to only heat and light what is being used operationally.

Across IHG Hotels and Resorts we're moving towards very low carbon. We're using electricity as much as possible rather than using old-fashioned boilers, so we're having heat pumps installed and making sure kitchens are fully electrified. Many measures will come together to drive the outcome.

With so many different measurements, how are you recording and conveying this?

That's one of the things I think the industry is really grappling with. How can we get accurate measurements and also standardised measurements that we can communicate to customers? What Zeal has done is lean on existing approaches that are approved in the industry, so there's a net zero carbon buildings framework, which has been developed by the UK Green Building Council. Zeal is using that and other methods and being very specific about quantifying the use in the building as it's being built and operationally afterwards.

From an IHG perspective we have a platform called Green Engage, which is in every one of our 6,000 hotels around the world. We use it to make sure every hotel measures and reports its energy use, month in, month out. We set targets annually for hotels to reduce their energy consumption and report it to us.

What's not in place is a common way of doing that. There are many different platforms that will offer some sort of rating or ranking, but that's one of the challenges in the industry. As a customer you can't get a comparable ranking across hotels and we need to get to that because we know this is becoming increasingly important in their buying decision.

Are these targets having an impact across the estate?

Yes, we are seeing energy reductions. I think it's close to 15% down year-on-year, thanks to all the initiatives already implemented and the awareness we're raising.

I think hotel owners understand that this is important for three reasons. First, to protect the value of their assets, it is important to have a strategy for how to become more sustainable. We recently had the European board meeting for our owners' association, where we come together to share best practice. We invited a guest speaker from one of the large investment funds to share his view on the importance of having a sustainable strategy for a hotel in order to drive the valuation of the asset or to go and raise capital in the future.

Secondly, they're fully aware that customers are demanding it; and thirdly, employees expect companies to be at the forefront of this.

Will guests visiting voco Zeal Exeter Science Park notice operational differences to other hotels under the voco brand?

We have had sustainability at the heart of decisions about voco from its inception. So, for example, the bedding package for voco is built around recycled materials, so the duvets are made from recycled plastic bottles.

We have bulk amenities across the brand, and we have always been focused on locally sourced menus to make sure we minimise the carbon footprint of the menu. Customers should expect to see something that feels like it belongs in the voco brand, but certainly is right at the forefront of it. And we will communicate that – we will make a point of talking about what's unique and different.

We've seen a strong return to corporate travel – how important are sustainability credentials in this area?

It is absolutely critical, particularly in Europe. Larger corporate clients are asking us a lot more questions now than they did a year ago, and certainly five years ago, about the measures that hotels are taking to meet sustainability targets.

Every large company in the world is likely to have their own targets and those that are responsible for booking travel in a large company will have to ask those questions and will have to make decisions that are in the best pursuit of their own goals, and it's important that hotels can articulate what they do.

Is there an appetite among owners to invest heavily in improving the sustainability of their portfolios?

We have looked first and foremost at the initiatives that we know have a really strong return on investment and a payback period of one to three years. We're also talking to owners about looking beyond the return on investment and educating them on what we're hearing from corporate clients. If there's not a path for this, there's likely to be a negative impact with customers actually not visiting the hotel. The conversations we're having are very productive and we've seen many owner groups planning how they're going to implement these initiatives.

We are mindful that we have only just come through a very difficult trading period, and while we've had some incredibly strong trading off the back of that, from an owner's perspective, we need to be thoughtful about the pace at which they can invest for the future. That is why we're working on bespoke plans for each hotel.

You've recently launched conversion brand Garner. Is the business viewing conversions more favourably than new builds?

One of the key trends is fewer signings of new build hotels and more signings of conversions. The mix stands at about 50:50 in Europe, whereas we used to be far more focused on new build hotels – that's very much driven by the current economic environment.

The lending environment shows far more appetite for conversions, where an independent hotel can join a large group like IHG Hotels & Resorts and get all the benefits of the enterprise and loyalty programmes and so forth.

So what does that mean for us? Well, we've looked at each and every one of our brands to ensure they are fit for conversion. For example, voco was designed to be very appropriate for conversions because it has fewer hard standards and it's more about embracing the individuality of each hotel. But similarly, for our Holiday Inn and Holiday Express brands – the powerhouse brands – we have many examples of taking existing hotels and converting them into those brands in a way that has been really thoughtful while still giving a level of consistency to the guest.

At the other end of the scale we have new brands, such as the Vignette collection, which is specifically designed to take hotels that are great in the luxury space and bring them into the fold. Our first UK hotel under that brand will open soon.

When you're assessing conversion opportunities, how much consideration is given to the sustainability credentials of a building?

When we do an assessment of what it will take [for a hotel] to join an IHG brand, we build into that measures to help the owners make sustainable choices. Typically, if there is a refurbishment, that's the opportunity to address every part of it, so maybe introducing a building management system with flexible zones to minimise use of electricity, installing heat pumps if possible, tackling all the low-hanging fruit and retrofitting energy conservation systems. We're also spending a lot of time thinking about how we can decarbonise the existing estate, in order to help all owners get to more efficient hotels.

Looking further ahead, IHG Hotels & Resorts has a 10-year sustainability plan – can you tell me about that?

In the midst of the pandemic, we decided to look ahead and we published ‘Journey to Tomorrow', our responsible business plan to 2030, in which we address people, planet and communities in order to be able to say that IHG Hotels & Resorts is absolutely committed to a brighter future across the board.

We talk a lot about the planet side of it and the environmental footprint, but equally, we put an enormous amount of effort into our community partnerships. We have an aspiration to impact 30,000 lives through our community activities and on the people side we have a very ambitious plan for diversity, equity and inclusion, whether that's to achieve a gender balance in our corporate hotel communities or a more ethnically diverse population, which we've got a big focus on. When you work at IHG, when you stay at an IHG hotel, we want everyone to feel welcome and heard and cared for.

What are your expansion plans in the UK?

We still look at the UK as a market that has tremendous possibilities for us. We have around 350 hotels and plenty more in the pipeline, and this year we've really seen development activity pick up again. That's driven by the fact that we continue to demonstrate the power of the IHG Hotels & Resorts enterprise and the fact that we can capture customers from around the world and bring them into our hotels.

Our largest footprint is Holiday Inn and Holiday Inn Express, and we see plenty of expansion opportunities in building up that network. We have 12 hotels open and a pipeline in place for voco and there's still plenty of opportunity for Hotel Indigo, which is a real success and an expansion brand for us in the UK. Vignette collection is new to market and there's plenty of opportunity there, and also Six Senses is soon to open in London. So with those new brands in addition to very established brands like Crowne Plaza and Intercontinental, we are well set for expansion and we have a lot of appetite for it.

And how is the performance in the UK?

We have all been positively surprised by just how strong it has been and how consistent it has continued to be after the peak of the summer. It's very much driven by corporates having returned with meetings and events. We've also had a good year in terms of big events in the UK, with King Charles III's Coronation and Eurovision, and they all help bring demand into various communities. It's obviously a precarious economy at the moment, and the cost of living crisis clearly has an impact, but we are well-placed in environments like that, because we play all the way from very affordable breaks to luxury experiences in capital cities.

We hear a lot about sustainability and clearly IHG is investing heavily and working with franchisees to achieve its ambitions, but how far can your influence extend to customers?

It's about choice. Consumers choose how they spend their time and there will be different degrees by which they are informed in what they believe is the right way to travel. I think we have a role to play in doing our very best to make sure they tread lighter when they stay somewhere, but we need to do that without preaching because, fundamentally, travel is a force for good.

There are so many benefits and we want people to continue to travel, to expand their minds, to expand their understanding, to foster the connections that make business happen, to connect families and feel more emotionally grounded. Let's not forget hotels are there to help people build those connections, to discover new things and leave feeling a little bit more enriched, whether that was through a business interaction or some special time with loved ones.