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The rising cost of materials, labor, borrowing and utilities means that the cost of financing a new hotel today is very different from the costs of doing so even a few years ago.
In addition, with the building and construction industry reportedly producing approximately 40 percent of global greenhouse gas emissions, developers are under increasing pressure to reduce their carbon emissions. In light of this, environmental, social and governance (ESG) issues are typically prioritized in new hotel developments.
Where development financing and ESG meet, there is “green financing.” We have seen an increase in sustainability-linked loans (SLLs) and green loans.
The purpose of SSLs and green loans and a brief description of how the hotel sector uses them are outlined below.
- Development financing and ESG are two key considerations for hotel developers
- ESG and global environmental concerns are spurring interest in green lending
- Sustainability-linked loans and green loans offer advantages to hotel developers
- Green lending does, however, increase borrower reporting and administrative obligations