Sustainability within
hospitality

Risks and opportunities for Cypriot hotels

Contents

  1. 1.What is ESG?
  2. 2.ESG effects on tour operators & booking agencies
  3. 3.How will tour operators react to ESG pressure?
  4. 4.Short term risks and opportunities for Cyprus
  5. 5.How SustainCy ensure you capitalise on those opportunities / long term success.
  6. 6.Contact information

What is ESG?

ESG is the inclusion of environmental and social metrics into a company's financial performance. Carbon emissions, waste generation, and labour practices all have an impact on a company's financial performance.

As part of the Green Deal — the EU plan to make the economy carbon neutral by 2050 — ESG has become a core focus for banks, investors, and CFOs.

Booking agencies & tour operators who fail to comply with ESG regulations will face penalties & fines, while compliance will lead to financial incentives such as tax breaks, reduced interest rate loans, and green bond eligibility.

The tourism industry is expected to be significantly impacted by the introduction of ESG regulations, with hotels in Cyprus facing some of the most severe effects in the EU due to the high carbon cost of air travel and the island’s electricity system. A VSME report helps hotels in Cyprus stay competitive by addressing the ESG demands and expectations of tour operators and booking agencies.

The effects on tour operators & booking agencies

Travel agencies such as TUI, British Airways, Jet 2, and booking agencies such as Booking.com are now subject to report under the Corporate Sustainability Reporting Directive (CSRD) and align their business with the Sustainable Finance Disclosure Regulation (SFDR).

This means that the ESG performance of your hotel will directly impact the financial performance of your operators and booking agencies.

Why does this matter?

When tour operators and booking agencies seek loans, financing, or raise capital, ESG metrics are core performance indicators assessed by banks and investors. Poor ESG performance signals that they are not prepared to transition to a zero-carbon economy.

This means they will face:

How do tour operators comply with ESG?

In order to avoid fines and improve their ESG reports tour operators & booking agencies must carefully manage several key areas:

Carbon emissions

Tour operators are already introducing carbon budgets for their holiday packages to stay within emissions limits and avoid financial penalties.

Flights to Cyprus are long-haul and fuel-intensive. Combined with the country’s oil-based electricity grid, the carbon footprint of a holiday in Cyprus is significantly higher than in other EU destinations.

As a result, hotels with high emissions per guest-night become a liability, and operators are increasingly redirecting guests to lower-emission alternatives to protect their own compliance and risk profile.

Data requirements:

Under the CSRD, tour operators are required to report environmental data from all parts of their value chain, especially the hotels they feature.

If hotels cannot supply ESG data, operators risk incomplete or non-compliant disclosures leading to fines and reputational damage.

The ESG data points required are extensive, covering over 15 topic areas including energy, waste, water, and labour.

Hotels with a VSME report can provide this information in a consolidated, audit-friendly format.

Those without a VSME will take weeks to provide the data causing delays and higher compliance costs. Therefore, they face being deprioritised or dropped entirely.

Marketing claims:

Green marketing claims such as sustainable, eco-friendly etc. all need to be verified. If these claims cannot be scientifically verified, tour operators can face fines of up to 4% of annual revenue for greenwashing.

A VSME report helps hotels substantiate all environmental claims, particularly those relating to carbon reduction and sustainability performance, providing legal and reputational cover for both the hotel and its distribution partners.

Short term risks and opportunities for Cyprus

A good quality VSME report containing a structured carbon reduction and climate transition plan will benefit the tour operators & agencies greatly. Those hotels that lack a VSME report will face a multitude of consequences.

Hotels with a strong VSME report will be:

Hotels with no VSME report will be:

Prioritised in package listings

  • Higher visibility in internal systems (Jet2holidays, TUI Musement, Booking.com B2B)
  • Featured in “sustainable holiday” categories

Excluded from sustainability-labelled packages

  • No access to green filters, badges, or featured content

Offered long-term or preferred supplier contracts

  • Locked-in inventory or price advantages
  • Inclusion in “preferred hotel” networks

De-prioritised in dynamic packaging

  • Lower ranking in hotel sorting algorithms
  • Pushed to bottom of OTA search results (if shown at all)

Used to hit internal ESG KPIs

  • Low emissions per guest-night improve operator’s CSRD
  • Reduces operator’s regulatory and reputational risk

Dropped from long-term contracts

  • Lack of confidence in the hotel’s ability to transition leads to a high risk factor

Promoted in marketing campaigns

  • “Sustainable stays” email campaigns, landing pages, green filters

Flagged as an ESG risk

  • Internal ESG due diligence may recommend blacklisting or temporary delisting

Exposed to higher-value customers

  • Corporate clients, group bookings, eco-conscious clients

Assigned higher operational burden

  • More site visits, more paperwork, more scrutiny

Avoid legal exposure

  • Operators can legally back up green claims made in advertising

Refused or delayed promotions

  • Hotel cannot be legally marketed as “eco” or “sustainable”
  • Greenwashing risk too high

Reduce audit or site-check burdens

  • Certified/data-rich hotels are trusted, less frequent compliance reviews

Given reduced exposure to B2B clients

  • Business travellers and institutional buyers increasingly require ESG compliance; hotels with no data are filtered out

Additionally, hotels that develop their VSME reports now will benefit from a significantly reduced cost of compliance.

A proactive approach to ESG is often rewarded by regulators — including greater leniency, reduced fines for emissions, and faster approval for funding or certifications.

By the time ESG reporting becomes mandatory, early adopters will already have multiple years of structured data, demonstrating a clear trajectory of emissions reduction and sustainability progress.

How SustainCy ensure your long term success

What we do :

  • Produce a complete, tour-operator-ready VSME report through a simple 15-minute form
  • Develop and implement a tailored ESG strategy for your hotel
  • Conduct a detailed risk and opportunity analysis of future EU legislation
  • Instantly improve your KPIs
  • Transform your sustainable initiatives and certifications into tangible financial gains

At SustainCy we seek to strengthen your competitiveness, making your hotel a preferred partner for tour operators and booking agencies — not just in Cyprus, but across Europe.

Visit our website to learn more about the financial benefits of having a VSME report.