In the tourism industry, developers, owners, lodging brands, and financiers are increasingly developing a heightened interest in cross-cutting sustainability topics because of Environmental, Social and Governance (ESG) commitments, but also because it makes business sense.

Customers are also developing a greater sensitivity towards sustainability. According to Booking.com, 73% of U.S. travelers indicated that sustainable travel matters, and 44% are committed to making more sustainable travel choices in their next holiday trip.

The hotel sector contributes around 8% of global carbon emissions. Green building certifications have paved the way to emission reductions by providing a comprehensive framework for sustainable construction and operation, addressing various aspects of a building's lifecycle to reduce emissions and environmental impact.

The Leadership in Energy & Environmental Design (LEED) and Excellence in Design for Greater Efficiencies (EDGE) certifications have been increasing in popularity in the region, albeit still modestly.  This is a result of the significant impact they generate through tangible benefits at the property level, and by enhancing the hotels’ positioning as being sustainability-conscious and green, which improves the guests’ experience. 

The advantages of developing more sustainable hotels are extensive. They often include lower operating costs, improved operational efficiency, reduced carbon emissions, increased resiliency to climate hazards, and ultimately more satisfied customers.

The certifications

LEED, administered by the United States Green Building Council (USGBC), is the world’s most widely used green building rating system. This certification provides a framework for healthy, highly efficient, and cost-saving green buildings.

Established in 1993, it boasts more than 100,000 certified buildings worldwide. It is currently in version 4.1, with a draft for a fifth version slated for 2024. LEED has four levels of certification: Certified, Silver, Gold and Platinum.

There are approximately 1,000 LEED-certified hotels globally (as of November 2022), of which 465 are in the United States, 71 in Latin America, and a mere four in the Caribbean. At less than one percent of the total LEED universe, there is a lot more to do in the Caribbean.

These four trailblazers, who demonstrate a pioneering spirit to approach tourism development differently, include the Courtyard in Kingston, Jamaica, the Marriott in Georgetown, Guyana, the Pegasus Suites also in Georgetown, and the Element in Punta Cana, Dominican Republic. 

As part of its development impact mandate, IDB Invest led the financing for the Courtyard in Kingston, one of the first LEED-certified hotels in the Caribbean. Notably, we are doubling down on our support for a regional ESG agenda by financing the Four Seasons Hotel in Miches, Dominican Republic, which will set a high watermark for sustainability in the country.

EDGE was developed in 2015 and focuses on reducing the environmental impact of buildings based on three levels of achievement:

• Certified requires 20% savings in energy usage, water consumption and the energy embodied in construction materials;
• Advanced has the same criteria as Certified, but requires 40% in energy savings; and
• Zero Carbon (highest level) requires the building to achieve EDGE Advanced criteria, plus demonstrate a carbon neutral operation using a combination of GHG emissions savings and carbon offsets.

24 hotels are currently seeking EDGE certification in Latin America, four of which have attained the Advanced designation, but none have achieved Zero Carbon.  The first hotel slated for certification is the Four Points in Georgetown, Guyana, a pioneering project financed by IDB Invest on track to achieve EDGE Advanced.

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Through our advisory and technical services, we work with the sponsor, Caribbean Green Building, towards making it the first EDGE Zero Carbon hotel in Latin America and the Caribbean, an achievable milestone after a full year of operation at a minimum of 75% of the base case occupancy and the purchase of carbon offsets.

Moving the needle

IDB Invest is committed to supporting the development of sustainable hotels. We encourage clients to expand on the ESG agenda when considering new tourism projects. Case in point is Four Points by Sheraton in Georgetown, Guyana, a 172-room select service hotel featuring a 1,100-square meter conference facility and an over 3,500-square meter retail and entertainment complex.

IDB Invest provided technical assistance through climate change advisory services, tackling mitigation, adaptation, and transition risks. Initially, the property was slated to achieve Certified status only, but by identifying and maximizing additional investments, it is now aiming to be the first Zero Carbon in the region.

To encourage the developer to seek a heightened certification—and, consequently, a more sustainable project—there are Blended Finance incentives, whereby the loan’s interest rate reduces over time as the hotel achieves sustainability thresholds.

Some mitigation and adaptation strategies to achieving these milestones include a hybrid energy system with approximately 40% solar power generation; a high efficiency ventilation and air conditioning system; high-efficiency water systems powered by the self-generated solar energy; insulated walls with advanced materials and technology over 80% more efficient than brick walls; a foundation elevated by approximately 1.8 meters to adapt to sea level rise risk; and offsetting the remaining greenhouse gas emissions (GHG) via carbon credits.

These initiatives will not only reduce the project’s operating expenses, but they will also have a demonstrative effect across the market to showcase sustainable best practices and resilient construction against the backdrop of the rapid expansion and growth of Guyana’s economy and lodging market.

As we look across Latin America and the Caribbean there are certainly a few pioneering developers paving the way in supporting a green transition with a more ambitious sustainability agenda, as our track record in the region is still incipient.

By considering innovative financing structures that provide tangible incentives for reaching sustainability milestones, technical assistance and advisory that catalyze green initiatives, coupled with government incentives that promote best development practices, we can move the needle and increase the universe of green buildings in the region.

All stakeholders have a role to play and must do their part. It begins with a forward-looking vision, understanding the basic premise that sustainability matters, and it is not just a ‘nice to have’ but a must have, as it is right for the planet and good for business.

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