CitizenM secures €480M sustainability-linked loan

Amsterdam-based hotel brand CitizenM has secured an approximately €480 million sustainability-linked loan that the company says underlines its commitment to reducing its environmental impact while also helping drive sustainable growth.

Sustainability-linked loans incentivize companies to achieve environmental benchmarks to secure lower interest rates. CitizenM’s funding is tied to environmental, social and governance (ESG) targets that include reducing CO2 emissions and improving green building certifications of the company’s European-owned hotels.

HSBC UK and HSBC Continental Europe, ABN AMRO Bank N.V., and Aareal Bank facilitated the deal, which makes CitizenM one of the first European hospitality businesses to adopt this funding structure.

“At CitizenM, we take sustainability seriously,” says CEO Klaas van Lookeren Campagne. “We seek to build and operate hotels that minimize our impact on the environment, and it is important to us that our ongoing commitment to sustainability is reflected in every facet of our business.”

The funding was provided equally by the banks, with HSBC UK acting as facility agent and HSBC Continental Europe acting as sustainability linked loan coordinator.

Elizabeth Davies, head of hotels at HSBC UK, says the company is proud to be a part of the deal.

“With its high profile in the hospitality sector, we expect that CitizenM’s relatively early adoption of the sustainability-linked loan will help to drive further market adoption, as hospitality groups seek to demonstrate a serious commitment to creating positive impacts on the environment,” she says.

CitizenM operates 31 hotels worldwide across 18 cities and nine countries. Another 14 hotels are under development. Last year CitizenM announced plans to build a hotel in the Sandbox metaverse , enabling users to create their own worlds and experiences in what the company called the first-ever deal to build a hotel in the metaverse.

The new deal holds the potential for far-reaching significance in the hospitality industry, says Fred Bos, who oversees the commercial clients sector with ABN AMRO.

“We see climate change as the greatest threat to humanity,” he says. “We view this cooperation as a positive step toward the prevention of climate change and as an opportunity to grow our loan book in a responsible way. We look forward to scaling what we have achieved with this financing structure more widely across the highly attractive hotel industry.”

Trip.com announced a $1.5 billion sustainability-linked loan late last year with a number of financial institutions. Earlier this year, Pegasus Airlines announced what it terms the first sustainability-linked aircraft secured loan.