Issues facing the hotel industry: environment

Environment-related legislation is an important issue for the hotel industry. The following points very briefly highlight how existing and proposed legislation could impact upon the industry, both directly and indirectly, now and in the future.

Climate change and energy performance of buildings

The EU and various Member States are taking the implications of climate change very seriously. In December 2002 the EU passed the Energy Performance of Buildings' Directive that will apply to hotels. The EU sees this Directive as integral to its response to climate change and compliance with the Kyoto Protocol. The Directive will have an impact on the design and energy performance of buildings (including existing buildings). Several other EU and domestic laws and policies, including fiscal and economic policies, are being considered including the trading of emissions of greenhouse gases, especially carbon dioxide.

Green taxation

The regional government of the Balearic Islands introduced a Law in April 2002 for a tax to be levied on stays in accommodation owned by holiday companies. This tax is to be collected by the hotel and, depending on the hotel category, ranges from €1-3 per night, per guest. The Spanish government is opposing the tax in the domestic courts on political/constitutional grounds. The government says that the tax is incompatible with EU legislation on VAT, but the European Commission has indicated provisionally that there is no such incompatibility.

Internalisation of external costs

There have been calls from environment groups and some government bodies for external environment and social costs to be reflected in cost of a product or service eg imposing a tax on aviation fuel to take into consideration greenhouse gas emissions from aircraft. It was proposed in December 2002 by the Royal Commission on Environmental Pollution (RCEP) in the UK, to add a levy of £35 (€54.80) for a single journey on airline flight tickets.

Investor community

There is emerging acceptance by investors, shareholders and insurers of the link between environment and business performance. A responsible approach to environment is increasingly seen by the financial community as reducing the financial risk, including brand reputation, as well as providing competitive advantage. There is a rapid growth in environment and socially responsible investment eg the Dow Jones Sustainability and FTSE4Good indexes that only include stock of companies with the strongest records of social and environment performance.

Polluter pays

The 'producer pays' principle means that the producer of goods or services should be responsible for the costs of preventing or dealing with pollution causing damage to the environment, people and buildings. This is taken into account in all EU environment laws and policy and as a result it is implicit in most EU legislation.

Producer responsibility

There has been an increase in EU legislation making the producer responsible for the disposal of its own product at the end of its life cycle taking into account its impact on the environment eg packaging regulations, waste electrical and electronic equipment (WEEE) directive. Clearly this will mean that the cost to the user of such products will increase.

Integrated Product Policy (IPP)

This EU initiative is aimed at reducing the burden on the environment of products and services throughout their lifecycle, including development, use and disposal. An example of a 'new approach' ie moving away from traditional 'end-of-pipe' legislation to 'front-of-pipe' improved product design. The products and services to be covered have not been identified yet but will include the most environmentally damaging groups. This is likely to lead to wide-ranging measures including legislation, environment taxation and pricing to reflect environment impact.

If you would like to find out more about how environment-related legislation impacts upon the hotel industry please contact the following partner from our CMS International Hotel Group: Paul Sheridan T+44 (0)20 7367 2186 F+44 (0)20 7367 2000 or [email protected]