Purpose: Water heating is one of the major energy-consuming operations in the lodging sector. The purpose of the current study is to estimate the energy consumed and emission associated with hot water usage, to predict the energy cost required under different hot water systems in hotels; and to create a model for the decision-making criteria in selecting hot water systems. Design/methodology/approach: A total of 24 hotels, which use heat pumps as their main water heating systems, were investigated. A tailor-made model for estimating the energy requirement of the water heating system was employed. Comparative studies on the energy consumption and energy costs of various types of water heating systems, including heat pumps, diesel boilers, gas boilers, and electric boilers, were conducted. Moreover, an analytic hierarchy process was used to analyze hoteliers' and lenders' selection criteria for water heating facilities. Findings: The energy output for water heating by heat pumps was estimated at 15 GW in the lodging sector. The use of heat pumps can achieve substantial energy savings and reduction of air pollutants when compared with the energy requirements under conventional boilers. The latter accounts for 13 percent of the hoteliers' total decision weight on choosing water-heating systems. Whereas the air pollutants generated by gas-fired boilers are remarkably lower than those emitted in the power plants due to the use of heat pumps. Both bankers and hoteliers consider seriously the energy saving potential of hot water supply by trucks. Research limitations/implications: Due to the small number of decision-makers in hotels participating in the analytic hierarchy process, the result can only provide an indication of the overall picture of the selection criteria adopted by hoteliers. Practical implications: The analysis provides hotel owners and managers with an objective and scientific investigation of the emission prediction and energy cost estimation based on the use of different hot water systems. Hotel operators and owners can use the analytical results as reference for making green purchasing decisions. Originality/value: The current study, which is based on the operational experiences of existing hotels, is a collaborative work between hospitality industry practitioners and educators. It is also the first of its kind to indicate the emission impact of various types of hotel water heating systems and the perspectives of hoteliers and bankers on these systems. © Emerald Group Publishing Limited.