Rotana Corporate Sustainability Report 2017

61 ENVIRONMENTAL INCIDENT MANAGEMENT Since 2016, all Rotana locations are globally required to internally report on environmental incidents, and regulatory authority notices and fines through an online incident reporting system. This includes: • Exceedances: emissions or other environmental parameters above permitted or allowable regulatory levels. • Significant spills: spills that are above a designated risk-level based on an internally set company set volume parameters and thresholds. Only 1 minor chemical spill was reported in one of our hotels in the UAE and was dealt with effectively. • Regulatory warnings: received by Rotana hotel for alleged deviations from an environmental regulatory or permitting requirement. • Fines: compensation paid by Rotana hotel to address and administer fines or penalties imposed by an environmental regulatory agency. Our online incident reporting has led to continuous improvements including increased awareness of responsibilities and more consistent reporting throughout Rotana’s global operations. FINANCIAL IMPLICATIONS AND RISKS DUE TO CLIMATE CHANGE The global economy and Gulf Cooperation Council (GCC) region specifically have entered a new era: issues such as oil price, the over-consumption of finite natural resources, climate change, taxation, population growth and the associated increase in demand for water and energy are creating new challenges and opportunities for both the private and public sector in the GCC. Oil revenues have decreased and the issue of water scarcity has featured as a priority on the political agenda of GCC countries forcing them to embark on energy price reform in recent years, limit growth in energy consumption and support fiscal adjustments that are necessary in the current lower oil price environment. Several countries have raised their energy and water tariffs to double. It is essential for us to understand how the above listed ‘macro sustainability trends’ are already impacting our GCC business and how it will affect our organisation’s growth and revenue in the short, medium and long term. Using a business impact matrix, we were able to assess and quantify the financial impact of our 2 main environmental risks, energy and water, which have a direct influence on our profit. To complete our analysis in the absence of clear figures for energy and water price forecasts till 2020 in the GCC region, we used a number of information sources from GCC and international organisations to help estimate future trend forecasts. This work on forecasting key risks and implication on costs provided us with useful insight into the impact of water and energy over the next 5 years. It enables us to better manage our operations in several ways: • Enables future planning decisions to be evidence based; • Provides operational efficiency and significant costs savings through investment in sustainability projects; • Evaluates and tracks sustainability implications over time; • Aligns the company energy and water targets with tariff increases and changes. In 2015, utility expenses as a percentage of room revenue represented an increase of 3% as compared to 2014, and will approach an average of 5.1% percent of total hotel revenue. We estimate that this percentage will continue to increase by 11% in our GCC hotels raising average utility expenses as a percentage of room revenue to 5.6% by 2020. The estimate is influenced by and will vary according to fluctuating business volume, occupancy, average room rate and increased energy and water tariffs in each GCC country. • Although the utility tariffs in various countries have increased, we have achieved in 2017 a 4.5% reduction in energy cost per occupied room from 2016, a drop from USD 14.2 to USD 13.7; • We were also able to maintain the percentage of total utility costs from total revenue at 7%, despite the higher utility tariffs; ENERGY AND EMISSIONS The landmark Paris Climate Change Agreement was ratified in 2016 and leading countries have set out to implement their self- imposed national climate targets. Government leadership in the countries where we operate have set new targets, increased or doubled utility tariffs. Since 2012, we have initiated close monitoring of our energy consumption in our operations in order to better manage energy efficiency performance in our day-to-day operations. We make every effort to improve resource management across our operations by investing in new technologies, energy efficient equipment, and the use of renewable energy. We have set intensity reduction targets across our operations of 10% by 2020, with 2012 being the baseline year. The targets are aggregated at the group level. Unit 2015 2016 2017 Cost of utilities per occupied room USD 14.18 14.34 13.72 Cost of utilities per available room USD 10.32 10.05 9.59 Cost of utilities of total revenue % 6.38 7.01 7.2 Energy Consumption (KWH) 2016 2017 Fuel 4,454,759 4,057,297 Electricity 335,743,402 341,297,131 Heat 7,319,652 8,443,665 Gas 224,833,376 252,525,228 Cooling 180,043,228 176,886,545 Total energy consumption 793,222,292 820,394,988