ROCKVILLE, MD.—Choice Hotels International recently released its 2022 Environmental, Social and Governance (ESG) Report. (See the recent press release.) The report highlights significant new steps that should cut utility costs, save time for franchisees, and increase the company’s ESG commitments. Among the steps highlighted in the release is the hiring of Megan Brumagim, Vice President, Sustainability for Choice Hotels. That hiring was announced in April 2022. Green Lodging News recently interviewed Brumagim about Choice’s ESG initiatives. Here are the results of that interview in Q&A format.
GLN: Prior to your appointment, nobody was leading the ESG charge at Choice. (Unless I am incorrect.) Of what value is it for Choice to have someone like you overseeing its ESG efforts?
Brumagim: Sustainability is core to who we are as a company and while this is a new role, the ethos behind it has been alive and well for our entire history. It’s about ensuring our business—which was founded more than 80 years ago—continues to be competitive into the future. We approach sustainability from two perspectives, 1) the overall impact we have on the environment, our employees, customers, and communities and 2) how these initiatives can help our franchisees find efficiencies and potentially save money. We can’t have one without the other.
GLN: Provide a bit of background on Commitment to Green and what it entails. Does it require, like other large chains, hoteliers to report their energy, water, waste each month? Is the dashboard now up and running at some hotels? The most important question here is how is Choice measuring the impact of each property so that it can track continuous improvement, or lack thereof?
Brumagim: The Commitment to Green program helps hotels improve their bottom line through savings, stay compliant with local regulations and make their hotel more visible to capture more business. Through this program we provide a suite of turn-key resources and tools, including our revamped Room to be Green environmental certification, solutions to navigate rebates and incentives, and more. This certification helps hotels achieve stronger consideration among the increased number of sustainability-focused guests, as well as meet most corporate RFP requirements and potentially drive more cost savings.
The journey for every hotel starts with measuring and benchmarking their utility usage and CO2 emissions. Everyone knows the saying, “If you don’t measure, you can’t manage.” Monitoring utilities is the starting point, and we have a turn–key tool for this—the Energy Collection and Measurement Utility Savings dashboard. This dashboard, powered by Schneider Electric, also helps hotels save valuable time. It fully automates data collection from the hotel’s utility providers, saving them time so they can focus their attention on the guest experience.
We started piloting this tool in September 2022, onboarding approximately 600 hotels. We are now in the process of rolling it out to the rest of the U.S.
GLN: Of what value is it to Choice and its franchisees to have Choice report its Scope 1 and 2 emissions?
Brumagim: As said earlier, if you don’t measure, you can’t manage. It’s critical to monitor Scope 1 and 2 emissions so that we can create a baseline and then refine our strategy and tactics to ultimately lower our emissions. It is also something we are seeing more clients ask for when looking to book a block of rooms. The bottom line—reporting these emissions is critical to securing existing business and attracting new guests.
GLN: Of what value is it to be part of the Sustainable Hospitality Alliance?
Brumagim: As one of the largest members of the Sustainable Hospitality Alliance—which brings together an engaged network of leading hotel companies who are committed to work together to address key social and environmental challenges—Choice has access to a non-competitive forum with key industry stakeholders to collaborate on issues and create shared solutions. This allows us to influence the strategic direction of the social and environmental agenda in the hospitality sector as well as influence the wider industry value chain to advance responsible business.
GLN: Why is it important for Choice to have a formal program to drive more deals with women owners? Any idea what the percentage of male to female is currently? Why is it important to provide financial assistance to potential women and minority owners? Why are they not in the same financial position as their white male counterparts?
Diversity and inclusion are core to who we are as a company. According to the Castell Project Women in Hospitality Industry Leadership Report, for every nine men, there is only one woman who enters the hotel investment and development industry. We are dedicated to doing our part to change this statistic, which is why Choice is proud to be at the forefront of rebalancing the scales of opportunity. Our 2025 goal is to increase the percent of net unit growth deals sold with underrepresented minority owners and woman owners by 50 percent, as well as invest $25 million in incentives in contracts with underrepresented minority and woman owners. We believe it’s critically important to increase representation of women and minority groups because continuing to support diverse talent in the hotel industry is part of how we build a better tomorrow for our associates, franchisees, and guests.
While industry-wide parity is improving, with more female investors, directors, and leaders in hospitality than ever before, we know that women entrepreneurs still face significant economic and societal barriers when it comes to hotel ownership and development. Although the number of female, Black, and Hispanic hotel owners across our entire industry is rising, it’s not close to adequately representing the true make-up of our country. Choice has a higher percentage of women and people of color owners than the industry average—NABHOOD reports that 1.2 to 1.4 percent of hotel owners across the industry are Black and the Latin Hotel Association reports that 0.5 percent of hotel owners across the industry are Hispanic—and we are committed to removing the roadblocks these groups face when trying to get financing.
In 2022, we launched the enhanced HERtels by Choice Hotels, a program that leverages a multi-faceted approach to advance and empower women in hotel ownership. In March 2023, we hosted our inaugural HERtels by Choice Hotels Development Seminar—the first-of-its-kind seminar hosted by a major hotel company—where we welcomed nearly 40 franchise owners, general managers, and hotel associates to address the discrepancy in hotel ownership rates for women by empowering female owners with a day of training, education sessions, and networking opportunities. In addition to encouraging women owners to build confidence and leverage best practices in the lending, construction and hotel operations processes, the seminar aimed to advance the opportunity of hotel ownership by connecting prospective hoteliers with industry veterans and Choice executives. HERtels by Choice is leading the way in the hotel industry: since March 2021, more than 60 women have participated in the program, leading to 43 new female-owned hotels, and counting.
Since the creation of the Emerging Markets program 20 years ago, Choice has been a leader in creating hotel ownership opportunities for underrepresented minority entrepreneurs. We were the first hotel company with a dedicated team solely focused on extending the opportunity of hotel ownership to underrepresented populations. Growing ten-fold since its inception, we have awarded and financially supported more than 345 diverse franchisee participants. Entrepreneur Magazine named Choice Hotels International a Top Franchise for Diversity in 2022, in its first-ever ranking, recognizing our efforts to fuel diversity and equitable opportunity across the entire hotel industry.
GLN: What percentage of Choice leadership is currently comprised of women?
Brumagim: Choice Hotels’ commitment to sustainability and DEI is rooted in our DNA. Twenty years ago, Choice became the first hotel company with a team dedicated exclusively to growing a diverse franchisee base. The Choice Hotels’ senior leadership team (Senior Director level and above; pertains to U.S.-based corporate associates) is 41 percent Female and 11 percent Diverse (non-white). As stated in our 2022 ESG Report, Choice has set a goal to increase the representation of women in senior leadership roles to 50 percent.
GLN: How many hotels is Choice up to at this point?
Brumagim: Choice Hotels has more than 7,400 hotels, representing over 625,000 rooms, in 45 countries and territories. The nearly 7,400 hotels include a diverse portfolio of 22 brands that run the gamut from full-service, upper upscale properties to midscale, economy, and extended stay.
GLN: What are polystyrene products being replaced with?
Brumagim: Polystyrene products are being replaced with sustainable options such as paper products (all our in-room coffee cups are made from FSC-certified paper for example), wood (for coffee stirrers for example), or other highly recyclable materials such as PET.
GLN: Is there a reason some goals are for U.S. only?
Brumagim: More than 80 percent of Choice hotels are in the U.S. It therefore makes business sense to deploy many of our key initiatives in this market, where we can have significant impact through our scale. That said, we design every new sustainability program or solution with a global vision, ensuring that they can and will be deployed internationally wherever and whenever relevant. You will see some of those recent initiatives implemented domestically rolled out in other countries.
GLN: What best practices was Choice able to benefit from, from Radisson Hotel Group Americas?
Brumagim: Radisson Hotels Americas brought key expertise in the upscale and upper-upscale segment as well as deep knowledge of operations within its managed hotels division. This benefits Choice as we further develop our sustainability strategy and initiatives, allowing us to quickly pilot new programs in hotels that we now directly manage. For example, in March 2022, the Radisson Blu Mall of America became the first hotel in the world to install a CarbinX system, which both captures carbon to reduce greenhouse gas emissions and helps the hotel lower their heating costs. Choice can capitalize on this fantastic experience.
GLN: Explain what your required program with Ecolab consists of. This brand-standard laundry program offers opportunities to reduce the use of chemicals and detergents in laundry cycles, helping minimize the environmental impact of hotels through concentrated formulations that are biodegradable and non-toxic to aquatic life. Our U.S. hotels also have the option to use Ecolab’s Aquanomic 2.0 Low-Temperature Laundry Program, which can deliver up to a 40 percent savings in water and energy. In 2022, Choice properties in the U.S. that opted for this program saved 110 million gallons of water, 690,000 Therms of energy, 3,700 metric tons of CO2e, and 30,000 pounds of waste.
GLN: Room to Be Green impacts every Choice hotel? Please provide some examples of how Room to Be Green has been improved or will improve.
Brumagim: Room to be Green is our own hotel certification program. It helps hotels by providing a simple checklist of initiatives that make a meaningful impact, focused on categories such as energy efficiency, water savings, waste management, biodiversity and more. In updating our Room to Be Green program, we focused on identifying the latest best practices that can help hotels achieve cost savings, optimize their environmental impact, and help drive topline revenue.
The new Room to be Green has four levels, each one designed to help hotels progress step-by-step in incorporating sustainable practices into their operations. Just like with the previous version of the program, Level 1 is a brand standard. Levels 2 to 4 have been developed to help hotels achieve higher savings, meet higher environmental criteria, incorporate the latest technologies, take advantage of best practices, and help them stand out as sustainability leaders. Room to be Green standards range from replacing incandescent light bulbs with CFL/LED lighting to deploying a linen and towel reuse program to save precious water resources.
GLN: Explain how the Franchisee Sustainability Roundtable works.
Brumagim: Comprised of 11 owners from each of Choice’s brand segments, the Franchise Sustainability Roundtable meets several times a year and shares feedback and ideas with Choice leadership about best practices and learnings from incorporating sustainable practices into their operations. Launched in 2021, this Roundtable gave feedback that helped shape our Commitment to Green initiative and provided key early input into the development of the utility tracking dashboard.
Brumagim: Can you give me an example of how executive compensation is linked to ESG performance?
We have begun the process of linking executive compensation to the aspects of ESG performance that are most important to our business, starting with human capital management and Diversity, Equity, and Belonging. In 2021, we incorporated our corporate talent and diversity goals into the bonus management incentive plan for our senior leaders, and in 2022, we expanded that component of the bonus plan to include all people leaders.
Glenn Hasek can be reached at firstname.lastname@example.org.