European developers harness green subsidies

EUROPEAN REPORT – In September, construction got underway on a new 4-star hotel in the spa town of Banovci in Slovenia. The 31-room Hotel Narcisa on the grounds of the Terme Banovci resort is being built with a €1.7 million fund injection from the European Union. The EU is financing about a quarter of the €6.4 million project under its Recovery and Resilience Facility as a sustainable investment.

The project will make an important contribution to sustainable development, the EU Commission stated. “Fifty percent of the European funding will go to measures to achieve higher energy efficiency, contributing to the green transition.”

As the EU strives to be the first net-zero continent by 2050, with a 55% reduction in emissions by 2030 compared to 1990 levels, hotels must fall in line.

With tough new laws being unfurled on green claims and certification, the switch for hotels to decarbonization and energy efficiency is an obligation, not a choice.

As part of its so-called “Green Deal” policies for a decarbonized Europe, the EU is cracking down particularly on greenwashing with the Green Claims Directive, which will come into force next year. The law seeks to put a stop to carbon neutral claims through offsets, and other misleading information. Any environmental claims made by hotels must be verified.

With hotels facing increasing EU and national regulation on the road to net zero emissions targets, a host of European funding is available to hotels to make the transition, said Paolo Bartolozzi, vice president of the tourism organization, Skål Europe, and CEO of hotel industry tech company, HotelGoGo.

“Programs such as the European Regional Development Fund (ERDF) and the Cohesion Fund aim to assist hotels in upgrading their infrastructure, improving energy efficiency, and adopting renewable energy solutions,” Bartolozzi said. “Qualification criteria can vary by region but often include a commitment to achieving specific sustainability goals, compliance with environmental standards, and co-funding from the hotel or private investors.”

The funds are typically channeled through regional institutions, and each region has its specific processes and criteria for distributing these funds, Bartolozzi added.

For example, he said a hotel in Andalusia may apply through regional bodies that set their priorities based on local needs, whereas a hotel in Tuscany might face entirely different procedures.

“Hotels that obtain certification such as the EU Ecolabel will have a competitive advantage”, Bartolozzi said, “as it signals a commitment to sustainability” — a critical purchasing factor for guests.

Finding resources

Across Europe, the ERDF is providing financial support to hotels to invest in sustainability.

The Carpe Diem Hotel in Santorini, Greece, which claims to run on 100% certified green energy, used the funds to help achieve carbon positive status in 2020.

“That means we are offsetting more CO2 than we emit,” said Managing Director and CEO of Future Hotels Sotiris Kopatsaris, who believes in constantly evaluating sustainability performance.

“Sustainability is a journey,” Kopatsaris continued. “We minimize our energy consumption and track and measure our carbon footprint using the best tools available, which helps us to know where further reductions can be made.

“Every month we try to improve on that by improving our technology and our energy efficiency. It’s taken us years to reach that level of carbon neutrality, by reducing emissions but also planting our own forest, using smart sensors, using technology.”

In November, the European Investment Bank signed an agreement with the Spanish hotel and industrial laundry group, ILUNION, to support energy-efficient upgrades at its 31 hotels. Alejandro Oñoro, ILUNION's CEO, said the money would go towards implementing a climate action plan across its entire value chain. “ILUNION is developing a decarbonization strategy focusing on renewable energies, implementing energy efficiency measures,” he said.

The group said sustainability is a “key driver” of its management strategy and it aims to be a benchmark company in sustainability. As it invests in upgrades, it’s hoping to have BREEAM sustainable building certification — the toughest in the industry — at all its hotels soon after getting it for five new-builds in 2023. All properties already have the Ecostars hotel-specific sustainability certification.

For Paul Asselman, owner-manager of the Ecohotel Fevery in Brugge, Belgium, green labels count. The first Belgian hotel to get the European Ecolabel back in 2010, recently, after upgrades, the hotel became a Green Key property, using EU funds to further its environmental commitments.

“We were able to make some investments due to the EU stimulus funds provided via the Belgian Government — with EU money,” Asselman said. “The funds support sustainability efforts and energy efficiency, and the money was used for solar panels on our roof.”

Asselman claims answering to the EUs increasingly strict sustainability requirements by implementing more waste and energy measures pays as national funds shrink.

“The project cost approximately €18,000. The funds provided us with a (low interest) loan over three years and we will only pay 75% back. I can’t speak for others, but I see that the money offered by the government has decreased for green investments.”

More hotels may want to look to EU funds, which are booming, Bartolozzi said, predicting a significant shift in the industry over the next few years.

“The EU green rules will reshape the European hotel landscape. We’re already seeing a boom in compliance initiatives and certifications, alongside greater uptake of European subsidy programs. This is not just about regulation, it’s about opportunity — those who adapt quickly will lead the market.”

Bartolozzi emphasized the importance of understanding regional nuances to secure funding.

To tap into the subsidies, hoteliers should seek advice and collaborate with regional development agencies and environmental consultants to navigate the funding landscape, he advised.

“The transition to sustainability is challenging, but with the right tools and resources it’s an investment in a more resilient, profitable, and future-proof hospitality industry,” Bartolozzi said.