Net zero in practice: What Scotland’s hotel sector needs to know

For Scotland's hotel sector, sustainability and net zero are no longer a distant aspiration. A combination of legislation and guest expectations means that, for hotel owners, operators and investors, the question is no longer whether to act, but how and when.

The sale or leasing of a hotel may trigger the need for an EPC Action Plan. Under the Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016, the regime applies to qualifying non-domestic buildings with a floor area greater than 1000 square meters, subject to certain exemptions, including buildings constructed in accordance with the relevant building standards. Where the regime applies, an EPC Action Plan must be provided to purchasers or tenants. This plan will identify the physical improvements required to reduce energy consumption and greenhouse gas emissions, which can include changes to things like heating systems, insulation and lighting. The owner then has 42 months to complete the improvements, or may choose to defer the works and instead monitor and report annual energy data. This is just one of several pieces of legislation seeking to support net zero. Further reforms to Scotland’s EPC regime are due to come into force on 30 April 2028, introducing new-style non-domestic EPCs that show ratings for energy performance, energy use and direct emissions.

Guests are increasingly looking for hotels that protect the environment, and are noticing whether a hotel's sustainability claims are genuine. Features such as low-energy heating and lighting, locally sourced produce, less waste and transparent communication are now part of the guest experience.

There is also a reputational argument. Guests who are environmentally conscious may choose a hotel that aligns with their own values, while unsubstantiated sustainability claims can damage trust. The perception of greenwashing can be damaging in itself, while misleading or unsubstantiated environmental claims can also create legal risk under consumer protection law. In a competitive market, operators cannot afford to ignore this.

From an investor’s perspective, managing sustainability is all about certainty. The Scottish Government itself recognises the importance of providing businesses and communities with certainty on what the journey to net zero means in practice, and of supporting investment decisions. Buildings without a credible retrofit plan are likely to face tougher questions on capital expenditure, lending and exit. Having a clear plan on how to exploit clean energy sources is also beneficial. Hotels that plan and implement their sustainability strategy early on will protect their value and reputation, and likely to fare better than those that delay.

So, what does this mean in practice? 

As owners, operators and brands may each control different aspects of a hotel’s sustainability strategy, management agreements, leases and other operating arrangements must clearly state who makes the decisions and who pays for the initiatives. Will they be limited to those required by law, or will they exceed this minimum requirement? We are increasingly seeing sustainability compliance as part of standard due diligence and it can have a significant effect on value and liquidity. Those who treat sustainability as integral to owning, operating and financing a hotel, from acquisition through to exit, will be best placed to protect their asset and avoid being left behind.