ESG Program for Hotel Groups: Certification First Then Implementation - or Vice Versa?

Environmental, Social, and Governance (ESG) has rapidly moved from a corporate buzzword to a core strategic agenda for the global hospitality industry.

Urban Green Space: Media by WiX

For hotel groups, ESG is no longer limited to energy-saving initiatives or charity programs; it is increasingly tied to brand value, guest expectations, investor confidence, operational efficiency, and long-term resilience.

Global hotel brands, real estate owners, operators, and asset managers are under growing pressure to demonstrate measurable sustainability performance. Institutional investors integrate ESG criteria into funding decisions, corporate clients prioritize sustainable accommodation for business travel, and leisure guests are becoming more conscious of environmental and social responsibility when choosing hotels.

Amid this shift, hotel groups face a fundamental strategic question: Should they pursue ESG certification first and then implement sustainability programs, or should they implement ESG initiatives first and seek certification later?

This question is particularly relevant for multi-property hotel groups, where consistency, scalability, and brand reputation are critical. The decision influences capital allocation, operational priorities, staff engagement, and stakeholder trust across all properties.

This article explores both approaches, analyzes their implications for hotel groups, and proposes a practical strategic direction—especially within the context of emerging markets such as Indonesia.

Why ESG Matters for Hotel Groups

The hospitality industry is inherently resource-intensive. Hotels consume significant amounts of energy and water, generate substantial waste, rely on complex supply chains, and employ large workforces. At the same time, hotels operate in communities and depend on local ecosystems, tourism sustainability, and social stability.

Key ESG drivers in the hotel sector include:

• Environmental (E):Energy efficiency, carbon emissions reduction, water conservation, waste management, food sustainability, and green building design.

• Social (S):Fair labor practices, employee well-being, diversity and inclusion, community engagement, responsible tourism, and guest safety.

• Governance (G):Ethical business conduct, data protection (including compliance with Indonesia’s PDP regulation), transparency, risk management, and responsible procurement.

Major hotel companies such as Accor, Marriott, Hilton, and IHG have publicly committed to net-zero targets, responsible sourcing, and ESG reporting frameworks. For smaller and regional hotel groups, ESG adoption is no longer optional—it is becoming a prerequisite for partnerships, financing, and competitiveness.

However, the path to ESG maturity is not uniform. Some hotel groups prioritize certification (e.g., Green Building Certification, ISO 14001, or global sustainability standards), while others focus first on operational implementation.

The Case for Certification First in Hotel Groups

A certification-first approach means that a hotel group formally adopts recognized ESG standards and frameworks before rolling out large-scale sustainability initiatives across its portfolio.

Benefits of Certification First

1. Standardization Across Multiple Properties

   Hotel groups manage diverse properties—luxury, midscale, budget, resorts, and city hotels—often in different locations. Certification provides a common framework that ensures consistency in ESG practices across all hotels.

   For example, adopting ISO 14001 for environmental management or aligning with global sustainability reporting standards helps create uniform policies for energy management, waste reduction, and supplier evaluation.

   This is particularly valuable for hotel groups that aim to maintain brand consistency and operational control.

2. Strengthened Brand Credibility

   Certification from reputable third-party organizations enhances trust among guests, corporate clients, and investors. Many multinational companies now require their preferred hotels to demonstrate ESG compliance or certification.

   For hotel groups seeking to attract international business travelers or secure corporate contracts, certification can be a competitive advantage.

3. Investor Confidence and Access to Capital

   ESG-certified hotel groups are more likely to attract sustainable investment funds, green financing, or ESG-linked loans. Financial institutions increasingly assess ESG performance before approving hotel development or renovation projects.

   Certification provides tangible evidence that the hotel group is serious about sustainability, reducing investment risk.

4. Clear Roadmap for Implementation

   Certification frameworks offer structured guidelines that help hotel groups identify gaps, set targets, and measure progress. This reduces uncertainty and prevents fragmented sustainability efforts.

   
   

Risks of Certification First in Hospitality

Despite its advantages, a certification-first approach can create several challenges for hotel groups.

1. Risk of “Greenwashing”

   Some hotel groups may focus more on obtaining certificates than on achieving real operational change. Hotels may showcase eco-labels and sustainability badges while still maintaining inefficient energy use, excessive waste, or poor labor practices.

   This performative approach can damage credibility if guests or stakeholders perceive ESG efforts as superficial.

2. High Costs and Operational Burden

   Certification involves audits, documentation, consultancy fees, and compliance processes. For regional or mid-sized hotel groups—especially in Indonesia—these costs can be significant before any tangible sustainability benefits are realized.

   Smaller properties within a group may struggle to meet certification requirements, creating inconsistency across the portfolio.

3. Top-Down Approach May Limit Engagement

   If certification is imposed strictly from headquarters without involving property-level teams, hotel staff may see ESG as an administrative burden rather than a meaningful initiative. This can lead to minimal engagement and resistance at the operational level.

   
   

The Case for Implementation First in Hotel Groups

An implementation-first approach prioritizes practical sustainability actions before pursuing formal certification.

Rather than starting with frameworks and audits, hotel groups begin by integrating ESG principles into daily hotel operations.

Benefits of Implementation First

1. Genuine Sustainability in Hotel Operations

   Hotels that implement first focus on real impact rather than paperwork. Examples include:

   · Reducing energy consumption through efficient lighting and smart HVAC systems

   · Minimizing food waste through better inventory management

   · Eliminating single-use plastics

   · Supporting local suppliers and communities

   · Training employees on sustainability and responsible service

   These actions create tangible environmental and social benefits, regardless of certification status.

2. Operational Efficiency and Cost Savings

   Many ESG initiatives directly improve profitability. Energy efficiency reduces utility costs, waste reduction lowers disposal expenses, and local sourcing can optimize supply chain efficiency.

   By implementing first, hotel groups can build a business case for ESG based on financial and operational benefits.

3. Stronger Employee Engagement

   When ESG initiatives are integrated into hotel culture—such as green teams, staff training, and community programs—employees feel more connected to the purpose of sustainability.

   This improves morale, retention, and service quality.

4. Learning Before Formalizing

   Hotels can experiment with different sustainability practices, learn what works best in their context, and refine their strategies before seeking certification.

   This reduces the risk of adopting rigid standards that may not suit local operational realities.

   
   

Challenges of Implementation First

However, implementation-first also presents risks for hotel groups.

1. Lack of Measurement and Benchmarking

   Without formal ESG frameworks, hotel groups may struggle to track progress or compare performance across properties. This can lead to inconsistent practices and missed opportunities for improvement.

2. Limited External Recognition

   Even if a hotel group is genuinely sustainable, lack of certification may make it difficult to prove credibility to corporate clients, investors, or international partners.

3. Difficulty in Scaling Across Multiple Hotels

   What works in one hotel may not be easily replicated across an entire portfolio without standardized policies and governance structures.

   
   

Hotel Groups: A Hybrid Strategy is Most Effective

For hotel groups, the choice should not be an “either/or” decision. Instead, a hybrid strategy that blends implementation and certification is the most effective approach.

A recommended three-phase model:

Phase 1: Implementation First (Foundation Building)

Hotel groups should begin by integrating ESG into core operations:

• Conduct energy audits and reduce consumption

• Implement waste segregation and reduction programs

• Train staff on sustainability practices

• Engage with local communities and responsible tourism initiatives

• Strengthen data governance and PDP compliance

This builds real ESG impact from day one.

Phase 2: Framework Alignment (Structuring ESG)

Once initial initiatives are in place, hotel groups should align their efforts with recognized ESG frameworks.

This includes developing:

• ESG policies

• Measurement indicators (KPIs)

• Governance structures

• Standard operating procedures across properties

This ensures consistency and scalability.

Phase 3: Certification as Validation (Not the Goal)

Certification should be pursued once the hotel group has established meaningful ESG practices.

At this stage, certification serves as:

• External validation of efforts

• A tool for investor confidence

• A marketing advantage for corporate and leisure guests

Certification becomes a milestone, not the starting point.

The Indonesian Hotel Context

In Indonesia, the hospitality sector is rapidly growing, driven by tourism, business travel, and foreign investment. At the same time, environmental concerns—such as plastic waste, water management, and carbon emissions—are increasingly pressing.

The Indonesian government has introduced regulations related to sustainability, corporate governance, and data protection (PDP), which align with global ESG expectations.

For Indonesian hotel groups, especially regional players, jumping straight into certification without foundational implementation may be premature and financially burdensome.

A phased approach—starting with practical ESG actions and gradually moving toward certification—offers a more realistic and impactful pathway.

ESG and Brand Strategy for Hotel Groups

ESG is no longer just a compliance issue—it is a brand strategy.

Hotel guests are increasingly drawn to sustainable brands. Corporate clients prefer hotels that align with their own ESG commitments. Investors favor hotel groups that demonstrate long-term resilience and responsible governance.

By prioritizing implementation first, hotel groups build authentic ESG credibility. By pursuing certification later, they formalize and amplify that credibility.

This approach ensures that ESG becomes embedded in the DNA of the hotel group rather than treated as a marketing add-on.

Conclusion: What Should Come First for Hotel Groups?

For hotel groups, the most effective approach is clear:

Implement first, certify later.

Implementation builds real impact, operational efficiency, and internal culture. Certification then serves as validation, standardization, and external credibility.

In practice:

• ESG should start in the hotel’s daily operations, not in a consultant’s report.

• Sustainability should be lived by hotel teams, not just displayed in certificates.

• Certification should confirm what the hotel already does well, not replace genuine action.

Ultimately, the most successful hotel groups will be those that treat ESG not as a compliance requirement, but as a strategic driver of long-term value, competitiveness, and responsible growth.