In 2026, maintaining environmentally sound operations is now the norm rather than the outlier throughout the hospitality industry. However, the cost and effort of early implementations can make even the most logical upgrades seem daunting at first. Even if terms “AI,” “IoT” and “ESG” are a part of everyday hospitality industry conversations, some seasoned professionals are still getting used to their existence and applications.
Understanding what goes into the “ESG efficiency” alphabet soup can help make the new realities of keeping operations up-to-date easier to digest. Achieving environmental efficiency (or energy savings)—the “E”—can directly improve the bottom line, while having good social practices—the “S”—in place can spell better employee morale and productivity and solid communication with the community where the property is located. The “G” stands for governance and proactively addressing environmental regulations, social unrest and governance failures, which can have significant financial consequences.
Examining ESG efficiency from different perspectives is essential to making informed decisions, upgrades and investments. “Current conditions in late 2025 are pushing hospitality companies to be more efficient and more transparent,” said Shawn Tarter, RealTime Reservations. “Government rules and guest expectations are both changing. We are helping our clients adapt by giving them a single platform that makes it easier to plan, measure and improve their performance. This supports better ESG outcomes without adding more complexity to their daily operations.”
Jason Bryant, vice president, growth strategy, at Oracle Consumer Industries noted an uptick in cyber risks during 2025, which underscores the importance of secure data storage and governance. Rising operating costs and tight margins also drove the rapid adoption of automation, energy optimization and AI-powered spend analytics, allowing hotel management to control expenses through improved efficiency. These issues are driving a strategic shift toward more sustainable, technology-driven solutions.
“The surge of AI innovation, along with a growing vendor landscape, are making open standards and integration platforms essential to prevent technology lock-in and other things butting data at risk,” Bryant said. “Labor shortages and high turnover highlighted the necessity of automating repetitive tasks and enhancing staff training through digital tools. It is also important to acknowledge the approach of 2030 sustainability goals have brought renewed attention to measurable energy and water conservation, as well as paperless operations.”
Adam Freedgood, principal and client director at Third Partners, observes that current large language models (LLMs), a more advanced application of AI, are already producing efficiency gains for busy hotel managers by helping to synthesize large amounts of structured and unstructured information. However, he said it is one thing to streamline reporting and data management and an entirely different challenge to use the information to improve organizational performance.
“The ‘G’ for governance represents the ‘how’ when (managers set out to) improve environmental and social performance, and LLMs are helpful tools for developing new policies,” said Freedgood. “But it’s still up to people to do the challenging and messy work of implementation. From a bigger picture perspective, many executives and sustainability managers are struggling to understand the environmental impact of AI and weigh it against potential gains. The ESG issues wrapped up in AI include the obvious energy or emissions profile in addition to cybersecurity and broader possibilities of job automation and related economic shocks. (On the other hand), political and economic headwinds have resulted in a perfect opportunity for companies to focus on genuine performance improvement and value creation. We’re seeing a redoubling of efforts to connect sustainability programs to business value. That should have always been the point, but it’s more important today than ever.”
The Human Element
Freedgood acknowledges that with recent AI developments, especially in hospitality, this point in time is a perfect one to be entrepreneurial and experiment with new technology. However, he adds that some clients are concerned with the potential economic consequences of AI automation. In other cases, when automation is introduced too quickly, it can introduce major labor shocks and how the current political climate will play out in this situation. Companies located in states with active data center development, meanwhile, are understandably concerned about upward pressure on retail energy prices. If hedging strategies and renewable energy procurement aren’t already in place, for example, he recommends locking in fixed long-term electricity prices wherever possible.
“Corporate accountability typically means transparency,” he said. “When organizations are over-burdened by an increasing number of reporting obligations, AI can help lighten the load. When designing AI solutions, we are very cautious about good data hygiene. For example, LLMs can synthesize data from pre-approved sources but should be locked down to minimize the potential for hallucinations.”
U.K.-based Luke Rowlands, director/founder of EcoCognito (an international sustainability consultancy helping companies, including hospitality firms, adopt digital, tech and AI into their operations), stresses that throughout the world, the cost of living is a key concern for guests, making the implementation of ESG-focused efficiencies, reducing guest costs, essential. This enables hospitality companies and independent operators to keep room costs, food and other services fair while addressing social and environmental concerns affecting employees and guests.
Although some employees may be worried about technology replacing their jobs, responsible hoteliers can respond by making communication clear that it is implemented to empower staff, augment their skills and performance, and make them active participants in fulfilling overarching ESG goals such as energy efficiency, water conservation and waste management while meeting and exceeding guest expectations with innovations like smart rooms, smart water fixtures and better supply sourcing. This also helps reassure guests that hotel management has their best interests at heart.
“Employee welfare can be boosted by improving security for staff, and via predictive maintenance, which reduces the stress of last-minute maintenance panics,” Rowlands details. “Their working environment can be monitored and optimized for staff comfort (e.g., air quality and temperature), while technology can be used to remove some less enjoyable work, such as ESG data gathering, improving staff satisfaction. Meanwhile, guest comfort can be better optimized by enabling personalization within public areas and guest bedrooms, such as lighting, air temperature, air quality, water temperature and access to general hotel and destination information, boosting business success and ESG, while reducing pressure on staff.”
RealTime Reservations operates on the premise that using smart technology designed to work together can help hotels and resorts run more efficiently, serve guests better and support long-term sustainability goals. This comes in the form of management tools and options RealTime clients can mix and match to plan ahead by collecting and analyzing data in real time. When operators use more of RealTime’s tools together, they get a complete view of their operations in one place and do not have to switch between systems.
“Many of our clients faced rising costs, unpredictable demand and increased pressure to hit their goals,” continues Tarter, regarding the importance of establishing consistency and better streamlining of technologies in place. Many operators were using separate systems to manage different parts of their business, which made it harder to respond quickly. This led us to expand our tools and improve our AI features so that more services could be planned and managed from one platform. In 2026, consequently, we are focused on helping properties measure and improve how they use labor, time and resources.”
Tarter said that the new year will also bring forth stronger tools and detailed reporting features that will help users reduce waste, improve planning and make better use of the services they already offer. Through this streamlining, clients will have better insights to support ESG goals and improve results. AI and IoT can be used to plan ahead and reduce waste when, for example, if a property knows in advance how many guests have booked beach chairs, spa services or airport transfers and only prepares what is needed. It curbs the overuse of supplies and labor, while the platform’s AI technology can suggest upgrades that fit the guest’s itinerary to increase revenue without adding stress to the operation.
“Through our platform, properties can prepare based on actual guest demand,” he continues. “It enables (management) to understand what guests are booking before they arrive, schedule the right number of staff and prepare only the supplies and services that will actually be used. This leads to less waste from unused food, supplies and staff hours.”
Oracle Hospitality’s Bryant details their system’s approach is “human centric,” with AI serving as a co-pilot that automates repetitive tasks and augments staff expertise, while preserving authentic guest interaction. “Practical, measurable outcomes” including reducing energy and water consumption, minimizing waste, enhancing guest comfort and supporting staff efficiency, he said, adding that it will continue to enhance its “ecosystem” via the Oracle Hospitality Integration Platform (OHIP) in 2026 for a more seamless user experience. This consolidation is intended to reduce vendor sprawl and duplicate interfaces, providing clients a comprehensive view of their operations, enabling faster, more informed decisions that benefit both staff and guests.
“AI is planned to be strategically embedded wherever it drives value, such as attribute-based room assignment to cut operational waste, and predictive maintenance to minimize downtime,” Bryant said. “Security will remain a top priority, with planned accelerated migration to secure, purpose-built cloud data centers featuring advanced encryption and multi-factor authentication. ESG metrics will be operationalized within analytics platforms, allowing transparent tracking of resource savings, service quality and compliance with internal controls. This ensures that sustainability and responsible data governance are seamlessly woven into daily operations and strategic planning.”
ESG Relationship Goals
While efficiency and speed are essential when considering AI, IoT and other technological solutions, it is also a good idea to evaluate the philosophies, procedures and approaches of the consultants and platforms under consideration. Even with tested methods and reliable customer service, it is important that the firm or firms you hire operate in ways that are compatible with your hotels’ and resorts’ ongoing environmental, societal and governmental strategies.
“Helping hospitality clients achieve sustainability goals and responsible sourcing are central to our mission, especially as we support the ESG priorities of our clients and customers we support,” explains Natily Santos, vice president of Responsible Sourcing, Aramark + Avendra International. “Through our ‘Avendra For Good’ platform, we strengthen supplier diversity and supply chain resilience while expanding recognition and guidance programs to support these goals. We also continue to make strides in our ongoing investments in AI and supply chain technology like MaetaData to further enhance responsible sourcing analytics and reporting, embedding sustainability into every initiative.”
According to Santos, Avendra’s deep experience and global reach as a hospitality GPO play a key role in helping our clients improve their gross operating profit and ESG objectives. By having insights into product quality, sourcing and manufacturing locations, the company is able to identify cost-effective solutions to hospitality clients without compromising on quality.
“Our expansive global relationships enable us to swiftly adapt to changing market dynamics, sourcing better options or negotiating favorable terms when opportunities arise,” she said. “We continually challenge our suppliers to innovate and enhance their offerings, which allows our clients to benefit from the latest and best products at good pricing. These efforts ultimately add up to tangible improvements in gross operating profit for (clients) as they gain access to high-quality resources with optimized costs and ongoing support to maximize every dollar spent.”
The HBX Group is positioned as a ‘leading independent B2B travel technology marketplace’ that owns and operates Hotelbeds, Bedsonline, Roiback and The Luxurist, according to Carlota Galván, global head of ESG. She describes the firm’s value proposition as “a network of interconnected travel tech products and services” to partners such as tour operators, travel advisors, airlines, loyalty programs, destinations and travel suppliers. By developing a realistic and targeted roadmap for hospitality clients to reduce total carbon output, AI can also match travelers with sustainable lodging options, boosting visibility for eco-friendly hotels and destinations.
“We are actively leveraging technology, including AI, to support its sustainability goals and reduce (clients’) carbon footprint,” Galván explains.”We use AI and data analytics to calculate ‘Scope 3’ emissions, which include indirect emissions from activities such as corporate travel, energy consumption and waste generation. This helps the client understand the climate risk across its entire value chain and identify areas for improvement.”
Freedgood said his company works with nearly every client to intelligently screen, develop and implement AI-powered efficiency measures by keeping a pulse on their specific needs. For some, it means simply streamlining reporting. For most organizations, however, there are fundamental value creation opportunities that may lead to core product and service innovation the same way e-commerce revolutionized business practices back in the ‘90s.
“Last year, we created a GIS-powered technology tool to help developers predict and improve certain environmental impacts related to construction,” he explained. “The tool automates what was previously a time-consuming process of pulling together data from multiple government databases and on-site soil tests. If we were developing this tool anew in 2026, however, we would certainly evaluate AI-driven integrations both in the data processing and reporting features that could improve functionality.”
With ESG data readily accessible and regularly updated, a company can better evaluate how well a property or company’s existing ESG practices align with financial performance, risk management strategies and long-term sustainability plans. Even if your property or company already has successful practices and systems in place, several aspects need closer inspection when figuring out where to go next.
ESG by the Numbers
While hostels have a specific niche in the hospitality industry, their value and price proposition not only draw cost-conscious travelers, but also an interesting perspective on optimizing their operations via ESG practices in ways cost-conscious guests appreciate.
“We focus on direct, verifiable emission reductions within our own operations and value chain,” said a&o Hostels’ ESG director Arben Maliqi. “This means measurable actions when optimizing energy efficiency, expanding renewable energy adoption, reducing waste and working with suppliers to achieve measurable emissions reductions rather than external offset-based solutions. We aim to help clients drive measurable impact and demonstrate a strong, long-term commitment to responsible, future-focused hospitality.”
- Since first tracking its environmental footprint in 2015, a&o reduced CO₂ emissions by over 75 percent, now averaging just 3.65 kilograms per overnight stay.
- 98 percent of electricity demand is met by renewable energy, with 12 properties producing ~500 MWh annually via on-site photovoltaics, showcasing deep investment in clean energy.
- a&o properties have eliminated single-use breakfast packaging and have strong local sourcing, plus real-time food waste tracking via FoodNotify.
- 93 percent of a&o Hostels are repurposed buildings, significantly reducing the environmental footprint by avoiding new construction and prioritizing energy-efficient renovations.
This article was originally published in the January edition of Hotel Management magazine. Subscribe here.