Sustainability in hospitality: the risks to business resilience

A poor harvest can affect menu availability. Ecosystem degradation can reduce the appeal of tourism destinations. Labour shortages, poor working conditions, or human rights issues within supply chains can affect service quality and brand reputation.

Sustainability in the leisure and hospitality industry is a critical part of business resilience, not just a long-term environmental concern.

Hotels, restaurants, resorts, cruise operators, tour companies, and entertainment providers all depend heavily on complex global supply chains and communities to deliver services. As climate change accelerates and social expectations evolve, disruptions can quickly translate into operational and financial challenges.

These risks are growing more significant with implications for operations and continued business performance.

Climate change disrupts hospitality supply chains, operations, and demand

Across the leisure and hospitality sector, climate-related disruptions can lead to rising costs, supply constraints, and operational challenges.

Changing weather patterns affect agricultural production globally

Repeated heatwaves have shortened crop growth cycles and reduced yields for some products. In the Netherlands, for example, potato growers have reported earlier harvests and smaller potatoes, while commodities such as coffee and grapes face pressure from warmer temperatures and severe weather conditions.

Extreme weather events disrupt operations

Heatwaves, droughts, floods, storms, and wildfires can disrupt tourism activities and increase operating costs. Water scarcity may place pressure on hotels, resorts, and leisure facilities, while higher temperatures can increase cooling costs and affect guest comfort.

Damage to transport infrastructure can also disrupt supply chains and access to destinations. For instance, low water levels on the Mississippi River in 2026 disrupted grain shipments, increasing delays and transportation costs.

Customer demand shifts due to climate conditions

Travellers are starting to adapt their destination choices and travel periods in response to changing climate conditions. Some destinations may experience shorter peak seasons or reduced visitor numbers during times of extreme heat, while others may benefit from changing travel preferences.

To strengthen resilience, leisure and hospitality businesses should assess both supply chain and operational climate risks, diversify sourcing strategies, improve infrastructure resilience, and build greater flexibility into their offerings. Organisations that proactively adapt will be better positioned to manage volatility in food availability, operational costs, and tourism demand.

Biodiversity loss puts tourism revenues at risk

Many hospitality operators and tour providers depend on access to national parks and natural landscapes. Nature-based tourism continues to grow, with wildlife viewing, hiking, and other outdoor experiences appealing to travellers worldwide, but these activities are directly tied to ecosystem quality and species abundance.

A prime example is safari tourism in Kenya, Tanzania, or South Africa, where wildlife attracts visitors. Declines in ecosystem health, habitat fragmentation, or species loss can reduce visitor demand and affect the revenues of hospitality and leisure businesses. In turn, this affects local economies.

Coral reefs are another example. They alone generate an estimated US$36 billion annually in tourism value, support millions of jobs, and underpin the attractiveness of many coastal destinations. Yet reef degradation is already creating business risks.

The fourth global coral bleaching event, which extended from 2023 to 2025, affected 84% of the world's reef area. In the Bahamas, disease has affected approximately 80% of reefs, threatening ecosystem services that support tourism and coastal economies.

Unlike traditional supply chain risks, the biodiversity asset itself is the source of customer demand. As a result, biodiversity conservation is not only an environmental objective, but also an asset-protection and revenue-protection strategy.

Social sustainability risks span the hospitality value chain

The leisure and hospitality industry faces distinct social sustainability risks due to its reliance on geographically dispersed workforces and extensive supplier networks. These risks are attracting regulatory attention globally.

In Europe, for example, the revised European Sustainability Reporting Standards (ESRS) address material impacts on workers, consumers, and affected communities. They reinforce the importance of transparency and due diligence in managing social risks.

Workforce rights and wellbeing

Hospitality businesses frequently depend on seasonal, migrant, and temporary workers, creating heightened exposure to labour rights risks. In many destinations, labour-intensive operating models can also lead to challenges around excessive working hours, occupational health and safety, and vulnerability to exploitation.

Labour shortages across tourism markets further highlight the need for supportive working environments and competitive remuneration. These factors, alongside considerations such as career development and workplace inclusivity, matter for attracting and retaining hospitality professionals.

Human rights risks in supply chains

Social risks extend beyond direct employees, with hospitality companies relying on complex supply chains involving food and beverage suppliers, cleaning services, construction contractors, transport operators, and outsourced staffing agencies. This creates potential exposure to human rights issues, including forced labour, child labour, and poor working conditions. Often, these occur in parts of the value chain that remain outside direct operational control.

Consumer safety

Customer-facing businesses must consider their impacts on consumers and end-users. Issues such as guest health and safety, accessibility, responsible marketing, data privacy, and the quality of customer grievance processes can all present social risks with serious reputational consequences.

Impacts on local communities

Leisure and hospitality can generate significant impacts on local communities, particularly in destinations experiencing high tourism intensity. Pressure on local infrastructure and public services, rising housing costs, congestion, resource consumption, and changes to local cultural and social dynamics are all attracting stakeholder and regulatory attention.

Effective management of social risks increasingly requires a comprehensive human rights due diligence approach that covers operations and supply chains. Organisations that pre-emptively engage with workers, suppliers, customers, and local communities can identify emerging issues before they escalate.

As sustainability expectations continue to evolve, strong social governance is becoming an essential component of resilience and long-term value creation.

Where to start with sustainability in hospitality

Managing sustainability risks is central to business continuity and long-term competitive advantage. With greater visibility into dependencies across supply chains, destinations, natural ecosystems, and workforces, leisure and hospitality businesses can:

Respond to evolving sustainability requirements
Identify vulnerable suppliers and destinations
Strengthen sourcing strategies
Protect critical natural assets
Improve workforce resilience
Adapt operations to changing climate conditions and customer expectations

To assess how resilient your hospitality business is to longer-term sustainability risks, consider the following:

How have extreme weather events, water scarcity, or changing climate conditions affected your operations, supply chains, or key tourism destinations? What is the associated financial impact?
Where are you already seeing signs of supply chain vulnerability, such as reduced availability or rising costs of food and beverages, disruption to transport networks, or increasing pressure on water and other natural resources?
How dependent are your business operations and customer offerings on healthy ecosystems and biodiversity? How could ecosystem degradation affect destination attractiveness, visitor numbers, or revenue?
Where are the most significant workforce and human rights risks across your operations and supply chain, particularly in relation to seasonal, migrant, temporary, and outsourced workers?
What sustainability-related risks have you elevated into enterprise risk management processes? How are they influencing sourcing strategies, investment decisions, destination planning, or future growth?

Evaluating these vulnerabilities early and taking targeted action can help companies protect business value while strengthening the resilience of the ecosystems, workers, communities, and supply chains on which they depend.

The RSM Global Sustainability team supports leisure and hospitality businesses with a range of ESG services, including sustainability-related risk assessments, value chain mapping, resilience testing, and governance reviews.

Contact a member of the team to discuss your organisation’s specific sustainability and supply chain challenges.