Elevation of these do-good standards into a brand pillar unleashes a wave of benefits for people, profitability and the planet for this premier beach resort owner-operator.
HONOLULU – Having Environmental, Social and Governance (ESG) standards is no longer a differentiator for hotel companies. Late adopters have learned at their performance peril that ignoring travelers’ and investors’ calls to action on these pressing issues can mean closing the door to bookings from the nearly half of Gen Z travelers who research environmental and social practices before booking, the 77% to 81% of travelers planning to reserve sustainable accommodations within the next year and the more-than-50% of investors who expect to pay a premium for hotel assets on the path to zero carbon emissions by 2050.
Half measures won’t impress consumers or the financial community, either. “We’re past the point at which sustainability means starting to use paper straws or eliminating plastic bottles,” said Jeff Wagoner, president and CEO, Outrigger Hospitality Group. “ESG is not about whether we check the right boxes. It’s not occasional. It’s not a photo op or a marketing push. It has to be part of the fabric of every single day and every business decision.”
Brand-building playbook
To maximize the impact of ESG throughout the corporate structure and at the hotel level, Outrigger transitioned the role of this trio of standards from what’s often one more tab on the nav bar to an actionable brand pillar.
“The discussions that led to that change helped us define how we would take the DNA of the company founded by Roy and Estelle Kelley in 1947 and evolve it in a way that ensured Outrigger would continue to improve as a business, a brand and a member of the Hawai’i community,” said Wagoner.
Jeff Wagoner, Outrigger Hospitality Group
That rethink was the springboard for an ESG-led corporate strategy that continues to layer in benefits from the bottom-line to the bottom of ocean. However, it also required a change in how these initiatives are managed.
“Before a company commits to making ESG integral to its brand, it’s key that the internal and external stakeholders agree that the goal is doing what’s right,” said Wagoner. “There may be some cost efficiencies but there are also expenses. Initially, the company will likely have more costs than returns. For example, replacing 25-year-old energy-inefficient chillers with new energy-saving units is a short-term hit in the cost column. But, combined with other initiatives, it will play a part in reducing energy usage across the entire portfolio over the long term. So, yes, the company has to invest in ESG, but the payoff can improve a range of metrics from production percentages to waste reduction and lower overall cost of operation.”
No greenwashing
Putting money behind ESG also pays dividends for both consumers and the investor community.
“One of the things I learned a long time ago is that whatever your marketing message is, it’d better be real. Consumers are more conscious of doing what’s right for the planet and they do their research to make sure they align to their spending decisions. A hotel company can’t put up a slick marketing message and not back it up in reality. Customers will see right through that,” he noted.
Like other aspects of brand-building, making ESG as much part of Outrigger’s identity as its Hawai’i roots means these standards have to be pulled through the enterprise from high-impact, globally important programs such as this renowned resort iconic Outrigger Zone (OZONE) initiative founded in 2014 to foster ocean stewardship – particularly coral health and resiliency – to property-level environmental and social programs and volunteer opportunities that engage team members as well as guests as agents of positive change.
Nine years of this level of commitment give Outrigger the metrics environmentally and socially conscious travelers want to see. This ranges from preserving, planting and protecting 100 football fields of coral through the OZONE initiative to training and mentorship programs for executive development and recruitment of women and indigenous leaders that resulted in a 30% to 41% YOY increase from 2021 to 2022 in female leadership; a 45% to 59% YOY rise in the number of people of color and a 58% gain in the total of female supervisors in Hawai’i.
Another milestone was the establishment of #OutriggerCARES as a 501c3 non-profit foundation in 2022. Last month, it shifted to OUTRIGGERCares Maui Host Relief Fund for displaced employees from the fires.
Ongoing support for the American Hotel & Lodging Association's (AHLA’s) No Room for Trafficking initiative resulted in 100% of hosts trained annually to do their part in ending this devastating practice. Proactive steps were enacted to advance responsible IT governance and infrastructure via internal and third-party service, including moving 71 of 75 systems into the cloud.
As important as this legacy dedication to ESG is, Wagoner stressed that companies will have to prioritize innovation in how to expand its reach and results to reinforce the claim that this framework is top of mind. He has the stat to drive that home. Outrigger had 161 ESG initiatives across 33 Outrigger Resorts and Hotels properties in 2022. This year, that figure will soar to 510 ESG initiatives in its brand portfolio. (Although one resort was destroyed in the deadly fires on Maui in July 2023, the acquisition of OUTRIGGER Kaua'i Beach Resort & Spa, which closed in August 2023, returned the total to 33.)
In addition to the internal upside, he said that any successful ESG strategy has to include the broader community, whether locally or worldwide. “We participate in a climate coalition here in Hawai’i that puts business executives, political leaders and environmental activists in the same room so that they can sit together and work out solutions. To get things done, you need to get traction. That’s not going to happen unless people stop fighting and look for common ground,” said Wagoner.
Innovation to improve “S” and “G”
Although the aspect of the “social” sector of ESG that relates to diversity is an obvious must-have for thought-leading corporations (as substantiated by decades of research showing diverse organizations outperform industry means of averages), Wagoner advised leadership to add local culture to the DEI definition.
There isn’t just one path to success. Diversity brings people with different experiences together. Blending these experiences and perspectives really helps a company understand what’s the best path forward.
Jeff Wagoner, Outrigger Hospitality Group
“There isn’t just one path to success. Diversity brings people with different experiences together. Blending these experiences and perspectives really helps a company understand what’s the best path forward,” said Wagoner. “Hawai’i is diverse, and Outrigger has been diverse since its inception. In my view, that diversity is what’s kept Outrigger healthy as a company.”
But its long-standing support for showcasing and preserving native Hawaiian culture (and, more recently, the heritage of other island nations where it added resorts) extended its ESG focus beyond the resorts. Before any development or acquisition takes place, Outrigger’s executive team conducts intensive research on the history of the site, its cultural importance, the existence of important artifacts and the sentiments of the community who will be living with its day-to-day impact.
“It can’t just be lip service,” said Wagoner. “We demonstrated that by employing a director of culture, Luana Maitland, and expanding the role of Monica Salter, our vice president, global communications, to include social responsibility as part of her title. We hire locally, source art and design elements locally whenever possible, procure local products and bring in local musicians and other performers to immerse guests in the authentic Hawai’i,” said Wagoner. Not surprisingly, voluntourism opportunities for both guests and employees get major buy in for projects from cleanup of the waterways around the resorts to building schools in the community.
The “G” in “ESG” embodies the saying “last but not least.” Governance is the accountability in business practices that supports environmental and social ESG successes. It’s also the driving force behind ensuring that crucial cybersecurity issues receive the corporate-level attention they deserve – and that investors expect.
As Wagoner noted, there are extensive international and domestic laws around data protection. For him, that prompted a closer look at whether Outrigger was employing the right suite of technologies – and if they were using them in the most efficient infrastructure.
Those questions led them to migrate all but four of their primary systems into the cloud over the past few years to capitalize on governance and security offered by cloud providers. Wagoner and his team also leverage the cloud to test out software they would like to use and make sure it interoperates with existing systems.
“Living in Hawai’i, we witness the need for and positive effects of ESG every day. From the first time you see trash in the ocean or you see local people who are not getting the opportunities they deserve, you know you need to put a stake in the ground. ESG cannot just be part of tagline; it has to be woven into the way you do business,” said Wagoner.
Mary Scoviak is custom and design content editor, the BHN Group.
The views and opinions expressed in this column do not necessarily reflect the opinions of Hotel Investment Today or Northstar Travel Group and its affiliated companies.